Continental Bids for US Air Assets

Continental Airlines is making a play for the Washington, D.C., assets of US Airways, saying the rival airline’s plans to sell them to cable executive Robert Johnson is anticompetitive.

Continental first made its $215 million offer for the assets being sold to startup DC Air on Oct. 2, when chairman and chief executive officer Gordon Bethune formally bid for US Airways’ 119 jet slots and 103 commuter, short-haul slots at Ronald Reagan National Airport.

Bethune followed with another letter Monday, saying he was disappointed that Continental had not heard back from either US Airways or UAL’s United Airlines, whose proposed $4.3 billion acquisition offer is causing US Airways to sell its presence at Reagan National.

“A sale of the DC Air assets to a strong and well funded competitor like Continental Airlines … would provide sustainable competition and real benefits to consumers,” Bethune wrote in Monday’s letter. “This should be the objective of United and US Airways as part of your divestiture strategy, and certainly of the regulatory bodies reviewing your transaction.”

The Houston-based Continental notes its offer comes at a 50 percent premium over the $141 million price offered by Johnson, chairman and chief executive of online entertainment company LLC and a US Airways board member.

Third-Party Discussions Prohibited

United spokeswoman Susana Leyva said airline competition can thrive in Washington without Continental’s help.

“At United, we recognized from the beginning when we announced the merger the need to maintain enhanced competition in Washington, D.C., by divesting at Reagan National,” Leyva said from her Washington office. “The creation of DC Air at National is an important benefit provided by the acquisition.”

US Airways said in a statement that its agreement with Johnson prohibits discussions with third parties regarding any alternative to the DC Air transaction. Through his secretary, Johnson declined to comment.

Testifying before Congress earlier this year, Johnson promised that his startup airline would be “a viable and totally independent competitor from day one.” However, DC Air would rely on United and US Airways for some of its equipment and employees and would lease its jets.

The deal already faces intense regulatory scrutiny from regulators, who are worried that the combination of the Elk Grove Township, Ill.-based United, the world’s largest airline, and the Arlington, Va.-based US Airways, the nation’s sixth-largest airline, would restrict competition and lead to higher prices.