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Members of a key Congressional panel Tuesday questioned whether UAL Corporation’s planned buyout of US Airways Group Inc. ultimately will help consumers, with several lawmakers predicting the deal will lead to poorer service and less competition among domestic carriers. Meanwhile, top antitrust and aviation regulators said, in prepared statements, that both the Department of Justice and the Department of Transportation will focus squarely on whether the deal will cut competition on certain routes and whether a planned spinoff will produce a viable competitor in the nation’s capital. Chicago-based UAL, the parent of United Airlines, the world’s largest carrier, announced in May that it plans to buy Arlington, Va.-based US Air, the sixth-largest carrier in the U.S., in a cash-and-debt deal valued at $11.6 billion. The deal has triggered merger and alliance talks involving some of the world’s largest airlines, including British Airways and AMR Corp., the parent of American Airlines. Such discussions have heightened concerns about the UAL-US Air deal among lawmakers. At a hearing Tuesday before the House Committee on Transportation and Infrastructure, some lawmakers belittled United and US Air’s claim that the deal will benefit customers by noting that both airlines have two of the worst service records in the industry. “I find it hard for this committee to believe that, because of this, they’re going to reach nirvana,” said Rep. Peter DeFazio, D-Ore. “Certainly, some people here are going to reach nirvana in terms of stock options.” Even some Republicans got in on the act. “What are you going to say when customers complain? Go find another airline? Whoops, there’s not another airline,” said Rep. Ray LaHood, R-Ill. “I think service is going to go right down the tubes.” Other members worried that the United-US Air deal eventually will cut the number of major U.S. airlines from six currently to three. “That’s where we’re headed,” said Rep. William Lipinski, D-Ill. “It may not be this year. It may not be next year. It may be five years down the line.” James E. Goodwin, United’s chairman and CEO; Stephen M. Wolf, chairman of US Airways; and Robert L. Johnson, chairman and CEO of the newly formed DC Air, were on hand for what was the first of three days of hearings on Capitol Hill regarding the merger. For their part, Goodwin and Wolf said the United-US Air deal won’t lead to increased concentration and will not squeeze low-cost carriers, such as America West and Southwest Airlines, out of the industry. In fact, United and US Air plan to create DC Air, a low-cost carrier that will serve 43 markets with Reagan National Airport in suburban Washington, D.C. as its base. Critics of the deal have said creating DC Air won’t increase competition because Johnson, the founder of media conglomerate, BET Holdings Inc., has little experience in the airline industry. John M. Nannes, the deputy assistant attorney general of the DOJ’s antitrust division, said the issue will be examined closely. Johnson dismissed suggestions that his airline won’t be a viable carrier, noting that he is investing $200 million in the company. “I’m not going to put $200 million to make these guys look good,” he said. “I’m going to put up $200 million because I think I can compete effectively.” Copyright �2000 TDD, LLC. All rights reserved.

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