SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
May 23, 2000
Date of Report (Date of earliest event reported)
US AIRWAYS GROUP, INC.
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
1-8444 54-1194634
(Commission File Number) (IRS Employer Identification No.)
2345 Crystal Drive, Arlington, Virginia 22227
(Address of principal executive offices) (Zip Code)
(703) 872-7000
(Registrant's telephone number, including area code)
ITEM 5. Other Events.
On May 23, 2000, US Airways Group, Inc. ("US Airways"), UAL
Corporation ("UAL") and Yellow Jacket Acquisition Corp., a wholly-owned
subsidiary of UAL ("Merger Sub"), entered into an Agreement and Plan of
Merger (the "Merger Agreement"). Pursuant to the Merger Agreement, and
subject to the terms and conditions set forth therein, Merger Sub will be
merged with and into US Airways, with US Airways being the surviving
corporation (the "Merger"). On the effective date of the Merger, each
issued and outstanding share of common stock, par value $1.00 per share, of
US Airways (other than shares owned by UAL, Yellow Jacket Acquisition
Corp., US Airways or shareholders who elect to exercise appraisal rights
under Delaware law) will be converted into the right to receive $60 in
cash. Consummation of the Merger is subject to various conditions set forth
in the Merger Agreement, including the receipt of regulatory approvals and
approval by the stockholders of US Airways.
A copy of the joint press release, dated May 24, 2000, issued
by UAL and US Airways announcing the transaction, is attached hereto as
Exhibit 99.1 and is incorporated herein by reference. The foregoing
description is qualified in its entirety by reference to the full text of
such exhibit.
ITEM 7. Financial Statements and Exhibits.
(c) The following exhibits are filed with this report:
(99.1) Joint press release of US Airways Group, Inc. and UAL
Corporation, dated May 24, 2000.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
US AIRWAYS GROUP, INC.
By: /s/ Anita Beier
---------------------------
Name: Anita Beier
Title: Vice President and Controller
(Chief Accounting Officer)
Dated: May 24, 2000
EXHIBIT INDEX
(99.1) Joint press release of US Airways Group, Inc. and UAL
Corporation, dated May 24, 2000.
[US Airways Logo] [United Logo]
UNITED AIRLINES AND US AIRWAYS AGREE TO COMBINE
TRANSACTION VALUED AT $11.6 BILLION
o US Airways customers will gain benefits of United's global route system
o Combination unites United's extensive east-west system with US
Airways' comprehensive north-south routes, creating first truly
efficient nationwide network
o US Airways hubs in Charlotte, Philadelphia and Pittsburgh to add U.S.
and international service and frequency
o Competition in Washington, DC and other markets will be maintained and
increased due to asset divestiture
o Frequent-flyer programs will be consolidated, offering passengers more
destinations than any other airline program
o No increases to domestic structure fares for two years following close of
merger, except for increases in fuel cost and CPI
o Travel agents are guaranteed no reduction in domestic standard base
commission rates for two years following close of merger
CHICAGO, IL, AND ARLINGTON, VA, (May 24, 2000) - UAL Corporation [NYSE:
UAL] and US Airways Group, Inc. [NYSE: U] today announced that their boards
of directors have approved a definitive merger agreement pursuant to which
US Airways will be acquired by United in an all-cash transaction valued at
$4.3 billion (plus the assumption of $1.5 billion in net debt and $5.8
billion in aircraft operating leases).
STRUCTURE - TERMS
Under the agreement, each share of common stock of US Airways will be
converted into the right to receive $60.00 in cash in a one-step merger
transaction. Based upon US Airways' closing price of $26.31 on May 23,
2000, this represents a premium of about 130 percent to US Airways
stockholders. The companies anticipate that the transaction will be
completed in 2001. The combination will be accounted for as a purchase and
is anticipated to be accretive to United's earnings per share in the second
year following the closing.
In recognition of the competitive issues connected with this transaction,
United also plans to divest significant assets to maintain and enhance
airline competition on routes into and out of Washington, DC. In connection
with this planned divestiture, United and US Airways have entered into a
Memorandum of Understanding with Robert Johnson, under which Mr. Johnson
would buy certain of US Airways' assets and create a new airline. This new
carrier, to be called DC Air, will be the first significant new entrant at
capacity-controlled Washington Reagan National Airport in over a decade.
United would retain certain assets at Washington Reagan, including the US
Airways Shuttle service to New York and Boston and the assets necessary for
United to fly to Pittsburgh, Charlotte and Philadelphia from Washington
Reagan.
THE COMBINED COMPANY - UNPARALLELED CONVENIENCE:
The combination of United and US Airways will deliver significant benefits
to millions of passengers and hundreds of communities throughout the United
States. The new network will make traveling more convenient for passengers,
connecting US Airways' eastern U.S. markets with United's east-west and
international networks. It will also give United passengers easier access
to US Airways' eastern United States network. Passengers will benefit from
the convenience of one-airline, one-baggage check-in and one frequent flyer
program.
o United will offer "seamless" one-ticket, one-airline service on
over 560 new city pairs - travelers will be able to fly without
the inconvenience of changing airlines. There will also be fewer
check-ins and baggage transfers.
o Many US Airways cities will gain easier access to international
destinations, strengthening their ability to attract international
investment.
o Travelers will be able to combine frequent flyer miles accumulated
in both airline programs into United's program. Passengers who now
earn frequent flyer miles on two carriers will be able to
consolidate their miles on United. This offers the opportunity to
earn travel awards to more destinations in more countries than any
other airline program offers.
o Passengers will also benefit from United's partnership with Star
Alliance member airlines - Air Canada, Air New Zealand, All Nippon
Airways, Ansett Australia, Lufthansa, SAS, Singapore Airlines,
Thai Airways and VARIG. This will make international travel much
simpler, with one-ticket booking, convenient baggage transfers and
easier check-in.
o United passengers will have the convenience of accruing United
frequent flyer miles on the US Airways Shuttle. Shuttle users will
be able to redeem their miles on United's unmatched international
network.
THE COMBINED COMPANY - UNPARALLELED SERVICE:
United plans to serve all cities now served by US Airways. United plans to
also offer 64 new daily non-stop flights in the U.S. and 29 new daily
international flights. Passengers will benefit from more non-stop domestic
flights. For example:
o From Pittsburgh, United plans to introduce the only daily non-stop
service to San Jose, CA and Portland, OR and add two non-stops a day
to Denver.
o From Philadelphia, United plans to offer the only daily non-stop service
to San Jose, CA, Portland, OR and Orange County, CA.
o From Charlotte, United plans to introduce the only daily non-stop
service to Portland, OR, and San Antonio, TX.
o From Washington Dulles, United plans to introduce the only daily
non-stop service to Orange County, CA.
o From Tampa, United plans to provide the only daily non-stop service
to San Francisco.
Passengers will also benefit from more flights to Europe, Asia, Latin
America and the Caribbean. Some examples of these flights include:
o From Pittsburgh, United plans to introduce new one-stop service to
significant Asian capitals, such as Beijing, Tokyo, Seoul and
Singapore, as well as to Buenos Aires, Rio de Janeiro and other
Latin American cities.
o From Washington Dulles, United plans to add the only daily non-stop
flights to Copenhagen and Bermuda.
o From Philadelphia, United plans to introduce the only non-stop service
to four international destinations - Amsterdam, Brussels,
Vancouver and Barbados. United also plans to offer additional daily
non-stop service to Frankfurt, Germany.
o From Charlotte, United plans to provide the only one-stop service to
Melbourne and Sydney, Australia; Auckland, New Zealand; Taipei, and
Seoul and new one-stop service from Charlotte to Caracas, Rio de
Janeiro, Sao Paulo, Buenos Aires and Santiago.
The transaction will significantly enhance the ability of US Airways hubs
in Pittsburgh, Philadelphia and Charlotte to grow and compete with other
hubs and international gateways, giving passengers easier access to the
West and to destinations in Latin America, Asia and Europe.
United is committing that it will not increase U.S. point-to-point
structure fares for two years following the closing of the merger, with
exceptions only for increases in fuel cost and consumer price index (CPI).
United is also committing that for two years following completion of the
merger, travel agents are guaranteed no reduction in domestic standard base
commission rates.
Following the transaction, US Airways' facilities, routes, equipment and
personnel will operate under the United Airlines name. The combined company
would have approximately 145,000 employees worldwide. This combination
would create a global airline with revenue in excess of $25 billion.
James E. Goodwin, chairman and chief executive officer of UAL Corporation,
said, "This combination provides significant benefits to the communities
and customers served by both companies. The addition of US Airways will
greatly improve United's ability to serve customers in the East and to open
its worldwide network to them. Similarly, the combination creates more
travel options and convenience for Star Alliance passengers who travel to
the cities US Airways serves. As the first carrier with a strong presence
across the U.S., United will be positioned to provide a competitive
challenge in new areas. We have the financial strength and unencumbered
assets to continue to grow the company."
Mr. Goodwin continued, "For the passenger and cargo customers of United,
this merger will fill a geographic void along the East coast and offers new
reach to the East and Southeast. It also will provide new competition to
others currently serving those regions. US Airways' system will allow
United to serve Trans-Atlantic, Latin American and Caribbean routes more
effectively, intensifying competition in those markets, and will improve
our ability to reach Asian destinations from across the U.S. This
combination will also allow us to enhance our code-sharing alliance, with
our Star Alliance partners, particularly across the Atlantic, making use of
US Airways' Pittsburgh, Philadelphia and Charlotte hubs. Together, we will
be able to upgrade service and access to the world for our customers. Our
customers will be linked to a system that will directly carry them to the
commercial centers of the world. In short, United and US Airways together
will create a more efficient global airline network that can improve the
quality of service for its customers.
"We welcome the US Airways employees who will be joining the United family.
Both United and US Airways employees are known for their commitment to
service and professionalism. We look forward to offering them additional
opportunity in the combined company. In addition, United intends to honor
all union contracts, and this transaction will not result in any furloughs
of United or US Airways employees," Mr. Goodwin added.
Stephen M. Wolf, chairman of US Airways Group, Inc., said, "The agreement
we are announcing today, in which United and US Airways will merge, is a
milestone in aviation history, melding the route systems and assets of two
proud and successful carriers into this nation's and the world's largest
and most comprehensive airline network. During the past four years, working
closely with the 40,000 dedicated employees at US Airways, we have made
enormous strides toward achieving our aim of becoming the carrier of
choice. Today we have the opportunity to achieve our goal of becoming a
world-class global carrier in a single stroke.
"By joining US Airways with United, we deliver value for our stockholders,
provide dramatically improved global service for customers and achieve
long-term security and career opportunities for US Airways' employees. This
is the right combination, the right partner, the right time and the right
step for our customers, communities, shareholders and our employees," Mr.
Wolf added.
MEMORANDUM OF UNDERSTANDING TO DIVEST ASSETS TO CREATE A NEW CARRIER
United proposes to address potential competitive issues related to the
transaction in Washington DC by divesting sufficient assets to create
another airline to compete in numerous routes currently served by US
Airways in the Washington, DC area. In connection with this planned
divestiture, United and US Airways have entered into a Memorandum of
Understanding under which Robert Johnson would buy certain assets and
create a new carrier to be called DC Air. This divestiture of assets will
ensure that competition is maintained and enhanced and further consumer
benefits will result from the merger.
The sale would include most of US Airways' assets and route structure
operating from Washington Reagan National Airport. These assets would
create a base of operations for the new carrier out of Washington Reagan.
Mr. Johnson is the founder, chairman and chief executive officer of BET
Holdings II, Inc., and a member of the US Airways Board.
DIVIDEND
The transaction is not expected to affect United's recently instituted
annual dividend of $1.25 per share of common stock.
APPROVALS
The merger is conditioned upon, among other things, the approvals of US
Airways stockholders, regulatory clearance and other customary closing
conditions.
Merrill Lynch & Co. acted as financial advisor and provided a fairness
opinion to United. Cravath, Swaine & Moore and Kirkland & Ellis (for
antitrust matters) acted as legal counsel to United. Salomon Smith Barney
acted as financial advisor and provided a fairness opinion to US Airways.
Skadden, Arps, Slate, Meagher & Flom and O'Melveny & Myers (for antitrust
matters) acted as legal counsel to US Airways.
ABOUT US AIRWAYS
US Airways, the US Airways Express carriers, US Airways Shuttle, and
low-fare MetroJet fly to 205 destinations worldwide, including 38 states in
the U.S., Bermuda, Cancun, Grand Cayman, Montego Bay, Nassau, San Juan, St.
Thomas, St. Maarten, St. Croix, and the Canadian destinations of Toronto,
Montreal, Ottawa, Hamilton, and London, Ontario. US Airways' transatlantic
destinations include Frankfurt, London, Madrid, Munich, Paris and Rome. US
Airways' Internet address is www.usairways.com
ABOUT UNITED AIRLINES
United Airlines is the largest air carrier in the world, offering more than
2,330 flights a day to 139 destinations in 26 countries and two U.S.
territories. It is an industry innovator with breakthroughs such as Economy
Plus seating, E-Ticket Service, Airport Gate Readers, Mobile Airport
ChariotsSM, United Shuttle, and the introduction of the technologically
advanced Boeing 777. United Airlines' Internet address is www.ual.com.
Safe Harbor Statement under the Private Securities Litigation Reform Act of
1995: This press release contains certain "forward-looking" statements
within the meaning of the Private Securities Litigation Reform Act of 1995.
These statements are based on management's current expectations and are
naturally subject to uncertainty and changes in circumstances. Actual
results may vary materially from the expectations contained herein. The
forward-looking statements contained herein include statements about future
financial and operating results and benefits of the pending merger between
United and US Airways. Factors that could cause actual results to differ
materially from those described herein include: industry capacity
decisions; the airline pricing environment; competitors' route decisions;
the inability to obtain regulatory approvals; actions of the U.S., foreign
and local governments; domestic and international travel patterns; the
inability to successfully integrate the businesses of United and US
Airways; costs related to the merger; the inability to achieve cost cutting
synergies resulting from the merger; labor integration issues; the economic
environment of the airline industry and the general economic environment.
More detailed information about these factors is set forth in the reports
filed by United and US Airways with the Securities and Exchange Commission.
Neither United nor US Airways is under any obligation to (and expressly
disclaims any such obligation to) update or alter its forward-looking
statements, whether as a result of new information, future events or
otherwise.
In connection with merger, US Airways will be filing a proxy statement with
the Securities and Exchange Commission. STOCKHOLDERS OF US AIRWAYS ARE
URGED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE BECAUSE IT WILL
CONTAIN IMPORTANT INFORMATION. Investors and security holders may obtain a
free copy of the proxy statement when it becomes available and other
documents filed by United Airlines and US Airways with the Securities and
Exchange Commission in connection with the merger at the Securities and
Exchange Commission's web site at www.sec.gov. Stockholders of US Airways
may also obtain for free the proxy statement and other documents filed by
US Airways in connection with the merger by directing a request to: US
Airways, 2345 Crystal Drive, Arlington, Virginia 22227, Attention: Kimberly
Holland, Investor Relations, Telephone: (703) 872-5009, email:
[email protected]. Stockholders of US Airways may also obtain
for free documents filed by United in connection with the merger by
directing a request to: United Airlines, 1200 East Algonquine Road, Elk
Grove Village, Illinois 60007, Attention: Patty Chaplinski, Investor
Relations, Telephone: (847) 700-7501, email: [email protected].
US Airways and its directors and executive officers may be deemed to be
participants in the solicitation of proxies from US Airways stockholders in
favor of the merger. These directors and executive officers include the
following: N. Bruce Ashby, Mathias J. DeVito, Rakesh Gangwal, Peter M.
George, Robert L. Johnson, Robert LeBuhn, John G. Medlin, Jr., Hanne M.
Merriman, Thomas A. Mutryn, Thomas H. O'Brien, Lawrence M. Nagin, Hilda
Ochoa-Brillembourg, Richard B. Priory, Raymond W. Smith, Stephen M. Wolf.
Collectively, as of January 31, 2000, the directors and executive officers
of US Airways may be deemed to beneficially own approximately 6.6% of the
outstanding shares of US Airways common stock. Stockholders of US Airways
may obtain additional information regarding the interests of the
participants by reading the proxy statement when it becomes available.
United and certain of its directors and executive officers may also be
deemed to be participants in the solicitation of proxies from US Airways
stockholders in favor of the merger. These directors and executive officers
include: Christopher Bowers, Frederic F. Brace, Rono J. Dutta, James E.
Goodwin, Douglas A. Hacker, Francesca M. Maher, Peter McDonald, Andrew
Studdert and Daniel Walsh. As of the date of this communication, United,
Mr. Brace, Mr. Dutta, Mr. Goodwin, Mr. Hacker and Ms. Maher do not
beneficially own any shares of US Airways common stock.
PRESS CONFERENCE
NOTE TO EDITORS: You are cordially invited to participate in the United /
US Airways press conference on Wednesday, May 24, 2000 at 12:30 pm (EDT) at
the Waldorf-Astoria Hotel in New York City, located on 301 Park Avenue
(between 49th & 50th streets), at the Starlight Roof (18th floor). If you
are unable to attend, you can participate by dialing 1-888-732-8927 (within
the United States) and 1-212-676-5227 (internationally).
LIVE SATELLITE FEED FOR UNITED AND US AIRWAYS PRESS CONFERENCE:
Wednesday, May 24, 2000
12:30 - 1:30 PM (EDT)
Telstar 6; Transponder 25
Downlink frequency: 12144 on the vertical
If you have any technical questions or problems with live satellite feed,
please call Mark Sofer at (917) 273-3057 or (917) 273-4712.
SATELLITE UPLINK FOR UNITED AND US AIRWAYS B-ROLL:
Wednesday, May 24, 2000 Wednesday, May 24, 2000
8:00 AM - 8:30 AM (EDT) 2:00 PM - 2:30 PM (EDT)
GE2; Transponder 6 GE2; Transponder 18
Downlink frequency: 3820 Downlink frequency: 4060
If you have any technical questions or problems with the B-Roll satellite
feeds, please call Quicklink at (212) 564-4831.
Today's news release, along with other news about United and US Airways, is
available on the Internet at http://www.ual.com and
http://www.usairways.com.
# # #
CONTACTS FOR UNITED AIRLINES: CONTACTS FOR US AIRWAYS:
FOR MEDIA: FOR MEDIA:
Andy Plews Richard Weintraub
847-700-5538 (day) 703-872-5100
847-700-4088 (evening / weekend)
FOR INVESTORS: FOR INVESTORS:
Patty Chaplinski Kimberly Holland
847-700-7501 703-872-5009
