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US Airways Group, Inc.
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UAL Corporation
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The following is a transcript of a speech given by James E. Goodwin, Chairman
and CEO of UAL Corporation, at a press conference on May 24, 2000
PRESS SCRIPT - UNITED REMARKS
- - - - - - - ------------------------------------------------------------------------------
James E. Goodwin, chairman and CEO of United:
Good afternoon everyone, and welcome. As you know, I'm Jim Goodwin, chairman
and CEO of United Airlines. With me today is Steve Wolf, chairman of US
Airways.
I am delighted to be here today to tell you about this morning's exciting
announcement. As you already know, United and US Airways announced that our
boards of directors have approved a definitive merger agreement in which US
Airways will be acquired by United. This merger creates a combined company
offering customers unparalleled convenience and service.
Bringing together United and US Airways creates a global airline that will
provide significant benefits to the communities and customers served by our
two companies.
This is a one-step, all-cash transaction valued at approximately $7 billion in
equity. In addition, we will assume approximately $4.3 billion in equity. In
addition, we will assume approximately 7.3 billion in debt and aircraft
operating leases, for a total transaction value of nearly $12 billion. Under
the agreement, each share of common stock of US Airways will be converted into
the right to receive $60.00 in cash. Based on US Airways closing price of
$26.31 on May 23, 2000, this represents a premium of about 130 percent to US
Airways stockholders.
Linking United's extensive east-west system with US Airways' comprehensive
north-south routes creates the first truly efficient nationwide network--the
transaction will stimulate commerce, jobs and economic development across the
United States.
Combining United and US Airways creates a global airline that will be better
able to deliver significant benefits to millions of passengers and hundreds of
communities throughout the United States. Our new network connecting US
Airways' eastern U.S. markets with United's east-west and international
networks will provide passengers with more convenient travel.
The two companies together will provide upgraded service and access to the
world. For the passenger and cargo customers of United, this merger fills a
geographic gap along the East coast and offers new reach to the East and
Southeast. Passengers will be linked to a system that will directly carry them
to commercial centers across the globe and will benefit from the convenience
of one-airline, one-baggage check-in, and one frequent flyer program.
United plans to serve all cities now served by US Airways. Passengers will
benefit from more non-stop domestic flights. United plans to offer 64 new
daily non-stop flights in the U.S. and 29 new daily international flights.
Passengers will have easier access to the West and to destinations in Latin
America, the Caribbean, Asia and Europe.
This combination will also provide new competition to other carriers.
US Airways' system will allow United to serve trans-Atlantic, Latin American
and Caribbean routes more effectively, intensifying competition in those
markets, and will improve our ability to reach Asian destinations from across
the U.S. The transaction will significantly enhance the ability of US Airways
hubs in Pittsburgh, Philadelphia and Charlotte to grow and compete with other
hubs and international gateways.
As the first carrier with a broad presence across the U.S., United will be
positioned to provide a competitive challenge in new areas. We have the
financial strength and unencumbered assets to continue to grow the company.
In short, United and US Airways together will create a more efficient global
airline network that can improve the quality of service for its customers.
In recognition of the competitive issues connected with this transaction,
United also plans to divest significant assets to maintain and enhance airline
competition on routes into and out of Reagan National in Washington, DC.
In connection with this planned divestiture, United has entered into a
Memorandum of Understanding with Robert Johnson, under which he would buy
certain US Airways assets at Reagan National and create a new carrier.
Mr. Johnson is the founder, chairman, and chief executive officer of BET
Holdings II, Inc. and a member of the board of US Airways. He also serves on
numerous other boards, including the Hilton Hotels Corporation and the United
Negro College Fund.
The new carrier will be the first significant new entrant at
capacity-controlled Washington Reagan National Airport in over a decade. It
will focus on providing service to and from Washington, D.C.
United would retain certain assets at Washington-Reagan, including the US
Airways Shuttle service to New York and Boston and the assets necessary for
United to fly to Pittsburgh, Charlotte and Philadelphia from Washington
Reagan.
We anticipate that this transaction can be completed in the first quarter of
2001. The combination will be accounted for as a purchase and is anticipated
to be accretive to United's earnings per share in year two.
We believe that this combination creates the first truly efficient nationwide
network in this country, providing unparalleled convenience and comfort to
passengers as well as introducing a new competitive force into the
marketplace.
Now, I am delighted to introduce Stephen Wolf.
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