
                         Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: WEDNESDAY, October 4, 1995                   TAG: 9510040054
SECTION: BUSINESS                    PAGE: B-6   EDITION: METRO 
SOURCE: BLOOMBERG BUSINESS NEWS
DATELINE: ARLINGTON                                LENGTH: Medium

2 LARGE AIRLINES CALLED UNLIKELY SUITORS FOR USAIR

USAir's talks with United and American are unlikely to result in it being bought by either airline, said industry consultants and analysts.

They cite a number of reasons why a purchase of the nation's sixth-largest airline by the nation's two largest carriers doesn't make sense: USAir's costs are the highest in the industry; it has ongoing labor problems; it's allied with British Airways PLC, a rival of United; and any pact would face strong antitrust questions.

``For [United] to buy USAir would be the economic equivalent of drinking hemlock,'' said Michael Boyd, president of Aviation Systems Research, a Golden, Colo., consulting firm.

Yet stocks of all three airlines reflected the news, released Monday, that Arlington, Va.-based USAir was in preliminary talks with UAL and AMR, the operators of United and American airlines, respectively.

USAir shares were up $1.25 at $12.871/2 in late trading of 9.3 million shares, seven times its three-month daily average and ranking it the third most-active U.S. issue.

Shares of the possible buyers dropped: UAL was down $5.25 at $167.50, while AMR was down $1.871/2 at $68.75.

The sale of USAir to either United or American holds little problem for Roanoke Regional Airport and could possibly bring about some improvements in service, said airport spokesman Mark Courtney.

Courtney said his concern is not for cities the size of Roanoke but for smaller cities that have USAir Express regional air service. Still, he said, the regional flights feed business into the larger airports and might remain safe because of that.

American, which recently reduced its hub operations in Raleigh and Nashville, could view a purchase of USAir as a chance to increase its presence on the East Coast, Courtney said. USAir has 2,400 daily departures along the East Coast and 57 percent of all departures, he said.

Courtney wondered what United would do with its hub at Washington Dulles International Airport if it bought USAir, which has a hub at nearby Baltimore-Washington International Airport.

Consolidation of USAir with another airline could mean less competition and higher ticket prices, but it could also open the door for some niche market discount carriers, Courtney said.

Staff writer Greg Edwards contributed to this story.

by CNB