The Brancatelli File


Desperate to salvage their merger, United and US Airways turned to American Airlines. And the deal they cooked up was the aviation equivalent of the Russo-Nazi pact that dismembered Poland just before World War II. American would gobble up TWA, which was facing the slow first quarter with no cash and was headed back into Chapter 11 protection. American would also take US Airways' big hub at Washington/National--after a decent interval when it was run by Robert Johnson, the founder of BET and a US Airways director. And United and American would share control of the US Airways East Coast Shuttle service. What leaked out several weeks later were details about how American and United essentially agreed not to compete against each other. It was as audacious a plan as it was desperate. Both United and US Airways were sinking because they were pursuing a quixotic merger while ignoring their day-to-day operations. American eventually picked up TWA for peanuts--although, after the events of 9/11, TWA wasn't the prize it seemed to be. But United and US Airways got nothing because regulators were not impressed by a scheme that would have left United and American with unfettered control of half the nation's skies.-- J.B.



January 11, 2001 -- We have learned something this week as American and United have wheedled and bullied and lied and attempted to frighten and bamboozle us into handing them absolute control of about half of the nation's skies.

We have learned that the more complex they make the deals, the more convoluted they make the terms, the more money they throw around, the more absurd power-sharing scenarios they spin, the more they bluff with talk of airline shutdowns and straw-men start-ups, the easier it is for us to just say no.

Do we want American Airlines to gobble up TWA, which trooped into bankruptcy court for the third time Monday morning, and get that wounded carrier's fortress hub in St. Louis, its vast roster of unused international route authority, its still-formidable transcon service and its increasingly competitive Caribbean presence?

No, we don't.

Do we want United to sell American about $1.2 billion of US Airways' assets so that United's proposed acquisition of US Airways will look more palatable to federal antitrust authorities and European Community regulators?

No, we don't.

Do we want American to buy 49 percent of that phony start-up carrier DCAir, which United wants to morph from US Airways' hub at Washington/National? Do we want American to have right of first refusal to buy the remaining 51 percent of DCAir when BET founder Robert Johnson has served his purpose and chooses to cash out?

No, we don't.

And do we want United and American to execute a preposterous joint-operating agreement, divvy up the current US Airways Shuttle and run the service as 50-50 partners in anti-competitive crime?

No, of course we don't.

Admire, if you must, American chief executive Don Carty's incredibly adroit moves yesterday that could make American the big winner as a result of United's ham-fisted attempt to swallow US Airways. Worry, as you should, for it is clear that TWA is once again teetering on the brink of extinction after a dozen years of ceaseless bleeding. And give credit where it is due: Jim Goodwin, the hopelessly overmatched chief executive of United, has finally realized he can't convince a single living soul that United should be allowed to devour US Airways whole.

Do all that, but just say no. No to American and United dictating terms and grabbing iron-clad control of half the country's aviation. No to a pair of airline takeovers that will create operational chaos across the nation because airline takeovers always create operational chaos across the nation. And just say no to a duopoly that will send the nation's commercial air-transport system into catatonic collapse every time there are snow flurries at O'Hare, a thunderstorm along the East Coast or maybe just a drizzle in Dubuque.

We don't need this. We don't want this. It can't work. It will raise costs, depress competition, create a frenzy of further combinations among the remaining carriers and make business travel even more of a miserable chore than it already has become. It would be bad for stockholders, bad for airline employees and bad for passengers.

And it simply isn't the American Way. I mean the American People's Way, of course. We don't permit the chief executives of an industry's two largest companies to dismember two smaller competitors simply because it suits their empire-building purposes.

The answer is no. Tell every frequent flyer you know. Tell the butcher, the baker and the software maker. Tell your Congressperson and your Senator. Tell it to Norm Mineta, who gets to be Transportation Secretary on January 20. Tell it to the new Attorney General, whenever we get one. Tell it to the head of the Justice Department's antitrust division when you hear that one has finally been appointed.

Come to think of it, tell President-elect George W. Bush that we all say the answer is no. He said he wanted to be a unifier and I think we're all unified on this one. Send him a note in care of the White House. He'll be there in just nine days. Tell him you're pretty sure that allowing any of these mergers will leave all of us behind. Tell him you think that he'd prove his integrity if he showed the Oval Office door to American and Don Carty, two big financial contributors to his party and his campaign. Tell him he'd earn our trust if he jawboned Jim Goodwin and US Airways chairman Steve Wolf and used his bully pulpit to make them stop merging and start fixing their own houses.

President-elect Bush, not popularly elected and wobbly after several controversial cabinet picks, needs an early win. He will have the devil of a time passing a tax cut or prescription-drug benefits for senior citizens or social-security reform in his first 100 days. But he could call a press conference tomorrow and say he's against all these mergers. He'd be an instant hero. He'd be compared favorably to Teddy Roosevelt, a great populist Republican. He'd launch his Presidency riding an unprecedented wave of good will.

How 'bout it, Dubya? Read our lips: Just say no.

This column originally ran at This annotation originally appeared at in December, 2002.

Copyright 1993-2004 by Joe Brancatelli. All rights reserved.