Associated Retired Aviation Professionals


January 8, 2001

This is Captain John Darrah, APA President, with the APA
Information Hotline for Monday, January 8.

Early yesterday evening I received a telephone call from
Executive Vice President Operations Gerard Arpey concerning some
possible acquisitions. Mr. Arpey indicated that senior management
had put together a deal involving US Airways, United Airlines and
American Airlines. As part of this deal, American Airlines would
purchase approximately 20 percent of US Airways' assets,
including aircraft, gates and landing slots, along with part of
the Boston-New York-Washington shuttle and 49 percent of a new
carrier named DC Air. American would operate its portion of DC
Air on a wet-lease basis, with our pilots flying around 10 or 11
DC Air planes.

American would compete with United on five routes from US
Airways hubs where United and US Airways now compete. The routes
include Charlotte, Pittsburgh and Philadelphia. Three of the
routes are from Philadelphia to San Jose, Denver and Los Angeles.
Another is from Charlotte to Chicago O'Hare and the fifth is from
Pittsburgh to Reagan National. In exchange, American would
acquire at least five slots at LaGuardia, four at Boston Logan,
three at Reagan National, and one each at Newark, Philadelphia
and Atlanta. The deal includes American buying 86 aircraft,
including Fokker 100s, MD-80s and 757s. American would also
absorb up to 500 US Airways pilots.

United and American would jointly operate the East Coast
Shuttle. The two carriers would alternate hourly, with each
flying under its own livery. The airlines would not share

By dividing US Airways' assets between American and United, the
deal is more likely to win federal antitrust approval.

The other significant development is a possible acquisition of
TWA, which is expected to file for Chapter 11 bankruptcy sometime
during the next several days. American would then step in to
provide financing, ultimately taking control of all of TWA's
assets, including its employees. If both deals go forward,
American would have about 25 percent of the U.S. market, compared
with around 26 percent for the newly expanded United Airlines.

According to Mr. Arpey, the US Airways-United-American deal
could conclude as early as today, but would not become final
until approved by the Department of Justice. Meanwhile,
discussions are ongoing with TWA management.

After talking with Mr. Arpey yesterday evening, I held a
conference call last night with the APA Board of Directors, Vice
President and Secretary-Treasurer, Negotiating Committee,
Chairmen of the Scope and Communications Committees, and legal
counsel. Management will provide a full briefing to APA's
leadership concerning these possible acquisitions as early as
Wednesday of this week. We plan to convene the APA Board of
Directors at headquarters for this briefing.

Once again, the US Airways-United-American deal may come to
fruition shortly, while discussions between American and TWA
management are ongoing. Once again bear in mind that both deals
require regulatory approval.

As soon I have further details concerning these possible
acquisitions, I will provide them to you. Thanks for calling.

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