General Lee
Well-known member
- Joined
- Aug 24, 2002
- Posts
- 20,442
Many members of Congress are condemning the potential deals, while few if any are supporting the idea of industry consolidation. Congress has no direct role to play in approving mergers, but it could help sway public perceptions and increase political pressure on the Justice Department to reject the airline transactions on antitrust grounds.
Perhaps the most controversial of the potential acquisitions involves US Airways Group Inc.’s unsolicited $8.7 billion bid for Delta Air Lines Inc. The two carriers have routes that overlap significantly along the East Coast, and hubs relatively near each other in the West. Congressmen representing Atlanta, Cincinnati, Pittsburgh, Philadelphia, Salt Lake City, Phoenix, Charlotte, N.C. and other cities where the two airlines have major operations fear that a merger would wipe out jobs, diminish air service and drive up ticket prices, Rep. John Lewis, D-Ga., said. Concerns about a loss of competition grew dramatically last week when UAL Corp., parent of United Airlines, and Continental Airlines Inc. announced they are considering a possible merger.
US Airways and United Airlines provide service to San Luis Obispo.
In addition, AirTran Holdings Inc. offered to buy Midwest Air Group Inc. for about $290 million. With so many carriers now in play, the number of concerned congressmen is growing.
"We can voice our opinion," Lewis said "And because we all represent different parts of the country, speaking out could have a tremendous impact on what happens."
Last week, incoming House Transportation Committee Chairman James Oberstar, D-Minn., said that if it appears that the USAirways takeover of Delta would be going forward in the new year, he would hold a hearing into the matter. Teri Rucker, a spokeswoman for incoming Senate Commerce Committee Chairman Daniel Inouye, D-Hawaii., said that panel also is planning a hearing.
Oberstar said that by publicly exposing the potential dangers of airline consolidation, his committee may be able to "throw cold water" on merger mania. "We can nudge the Justice Department to take the action they must" to prevent a loss in competition, he said.
Oberstar also said opposition to consolidation is bipartisan. "I’ve heard from members on both sides of the aisle" as worries have grown about the impact on jobs and service, he said. "I haven’t heard anyone come forward and say this is a really good deal."
Michael Boyd, president of the Boyd Group Inc., an aviation consulting firm, agreed that Congress would become involved because so many lawmakers represent cities with huge stakes in the outcome. "There are a lot of dogs in this fight," he said. Delta management opposes the transaction with US Airways, but if it were to go forward, the two carriers would have to drop routes to avoid expensive redundancies and overcome antitrust concerns. That could eliminate jobs and flights, especially in smaller cities, such as Savannah, Ga., and West Palm Beach, Fla."Any Georgia legislator who doesn’t stand up against this merger isn’t doing his constituents any good," Boyd said.
Indeed, many already have jumped into the battle, making floor statements and working behind the scenes in Washington to stop the merger. For example, Rep. David Scott, D-Ga., made a House floor speech shortly before the 109th Congress adjourned, saying that members of Congress should "do everything we can to stop this merger from going through on the grounds that it is anti-competitiveness, it is anti-consumer and it is anti-American."
In recent weeks, Sen. Johnny Isakson, R-Ga., talked to White House chief of staff Joshua Bolten and Attorney General Alberto Gonzalez, and in a Senate floor speech, said a Delta-US Airways combination "would lead us to singular service in many cities, an absence of competition, an inevitable increase in rates and, unfortunately, less than the healthiest aviation industry."
Earlier this month, the two chief executives, Delta’s Gerald Grinstein and US Airways’ Doug Parker, each met with Oberstar to discuss their views.
Darryl Jenkins, an industry consultant based in Northern Virginia, said that whether Congress gets deeply engaged on the issue of airline competition may depend upon the views of creditors owed money by Delta, which is under the protection of a bankruptcy court. If by next month, those creditors are in favor of the deal, then the bankruptcy judge may in turn support it and the transaction could be completed. That would push the other deals forward too. "Everyone is interested in this (Delta deal) because if one merger goes through, then two or three other mergers will follow," Jenkins said.
Lawmakers who want to head off that scenario should focus on stopping the Delta transaction, he said."It’s a way to rally the troops," he said.
Bye Bye--General Lee
Perhaps the most controversial of the potential acquisitions involves US Airways Group Inc.’s unsolicited $8.7 billion bid for Delta Air Lines Inc. The two carriers have routes that overlap significantly along the East Coast, and hubs relatively near each other in the West. Congressmen representing Atlanta, Cincinnati, Pittsburgh, Philadelphia, Salt Lake City, Phoenix, Charlotte, N.C. and other cities where the two airlines have major operations fear that a merger would wipe out jobs, diminish air service and drive up ticket prices, Rep. John Lewis, D-Ga., said. Concerns about a loss of competition grew dramatically last week when UAL Corp., parent of United Airlines, and Continental Airlines Inc. announced they are considering a possible merger.
US Airways and United Airlines provide service to San Luis Obispo.
In addition, AirTran Holdings Inc. offered to buy Midwest Air Group Inc. for about $290 million. With so many carriers now in play, the number of concerned congressmen is growing.
"We can voice our opinion," Lewis said "And because we all represent different parts of the country, speaking out could have a tremendous impact on what happens."
Last week, incoming House Transportation Committee Chairman James Oberstar, D-Minn., said that if it appears that the USAirways takeover of Delta would be going forward in the new year, he would hold a hearing into the matter. Teri Rucker, a spokeswoman for incoming Senate Commerce Committee Chairman Daniel Inouye, D-Hawaii., said that panel also is planning a hearing.
Oberstar said that by publicly exposing the potential dangers of airline consolidation, his committee may be able to "throw cold water" on merger mania. "We can nudge the Justice Department to take the action they must" to prevent a loss in competition, he said.
Oberstar also said opposition to consolidation is bipartisan. "I’ve heard from members on both sides of the aisle" as worries have grown about the impact on jobs and service, he said. "I haven’t heard anyone come forward and say this is a really good deal."
Michael Boyd, president of the Boyd Group Inc., an aviation consulting firm, agreed that Congress would become involved because so many lawmakers represent cities with huge stakes in the outcome. "There are a lot of dogs in this fight," he said. Delta management opposes the transaction with US Airways, but if it were to go forward, the two carriers would have to drop routes to avoid expensive redundancies and overcome antitrust concerns. That could eliminate jobs and flights, especially in smaller cities, such as Savannah, Ga., and West Palm Beach, Fla."Any Georgia legislator who doesn’t stand up against this merger isn’t doing his constituents any good," Boyd said.
Indeed, many already have jumped into the battle, making floor statements and working behind the scenes in Washington to stop the merger. For example, Rep. David Scott, D-Ga., made a House floor speech shortly before the 109th Congress adjourned, saying that members of Congress should "do everything we can to stop this merger from going through on the grounds that it is anti-competitiveness, it is anti-consumer and it is anti-American."
In recent weeks, Sen. Johnny Isakson, R-Ga., talked to White House chief of staff Joshua Bolten and Attorney General Alberto Gonzalez, and in a Senate floor speech, said a Delta-US Airways combination "would lead us to singular service in many cities, an absence of competition, an inevitable increase in rates and, unfortunately, less than the healthiest aviation industry."
Earlier this month, the two chief executives, Delta’s Gerald Grinstein and US Airways’ Doug Parker, each met with Oberstar to discuss their views.
Darryl Jenkins, an industry consultant based in Northern Virginia, said that whether Congress gets deeply engaged on the issue of airline competition may depend upon the views of creditors owed money by Delta, which is under the protection of a bankruptcy court. If by next month, those creditors are in favor of the deal, then the bankruptcy judge may in turn support it and the transaction could be completed. That would push the other deals forward too. "Everyone is interested in this (Delta deal) because if one merger goes through, then two or three other mergers will follow," Jenkins said.
Lawmakers who want to head off that scenario should focus on stopping the Delta transaction, he said."It’s a way to rally the troops," he said.
Bye Bye--General Lee
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