EXHIBIT 2.1
January 9, 2001
Mr. Robert L. Johnson
D.C. Air, LLC
1900 W Place NE
Washington, DC 20018-1211
US Airways Group, Inc.
2345 Crystal Drive
Arlington, Virginia 22227
Gentlemen:
Reference is made to that certain Memorandum of Understanding,
dated May 23, 2000, as amended, by and among Robert L. Johnson, UAL
Corporation and US Airways Group, Inc. (the "Memorandum of Understanding").
Capitalized terms used but not defined herein shall have the meanings
ascribed thereto in the Memorandum of Understanding.
Each of UAL, US Airways and Mr. Johnson acknowledges that the
provisions of the Memorandum of Understanding should be further amended.
Accordingly, the parties hereto agree as follows:
1. Section 3 of the Memorandum of Understanding is hereby amended
by inserting at the end thereof the following:
"Notwithstanding the foregoing, the parties agree that UAL and US
Airways may engage in discussions with third party air carriers for
the purpose of the formation and structure of DC Air ("DC Air
Discussions") and addressing "hub-to-hub" competition issues that
would materially impact the formation and structure of DC Air
("Hub-to-Hub Discussions"). Each party agrees to keep the other
parties informed of any such DC Air Discussions or Hub-to-Hub
Discussions and when it deems appropriate to include the others in
such discussions. It is understood tha Rakesh Gangwal is hereby
authorized to negotiate on behalf of DC Air (and that no
representative of UAL is authorized to negotiate on behalf of DC Air);
provided that any agreements, arrangements or understandings with any
third party air carriers relating to the formation and structure of DC
Air will in any event be subject to the approval of each party
hereto."
2. Section 4 of the Memorandum of Understanding is hereby deleted
in its entirety.
3. Section 6 of the Memorandum of Understanding is hereby amended
to read in its entirety as follows:
"6. Termination. This Agreement shall automatically terminate, and
the obligations of the parties hereto shall immediately cease upon the
occurrence of any of the following events: (i) termination of the
Merger Agreement; (ii) deliver of written notice of termination by any
party to the other parties hereto, which notice may not be delivered
before March 1, 2001; or (iii) delivery of written notice of
termination signed by any two parties to the other party.
4. Section 7 of the Memorandum of Understanding is hereby amended
to read in its entirety as follows:
"7. Expenses. If, prior to the consummation of the transactions
contemplated by this Agreement and the Term Sheet, this Agreement (or
the Transaction Documents) is terminated for any reason other than
solely as a result of a breach by Johnson, then US Airways shall, upon
request of Johnson, reimburse Johnson for up to $3 million of his
out-of-pocket expenses incurred in connection with this Agreement, the
Transaction Documents and the transactions contemplated hereby and
thereby, including, without limitation, reasonable fees and expenses
of accountants, attorneys and financial advisors, and costs and
expenses associated with financing of the transactions contemplated
hereby and thereby and regulatory compliance."
5. The following is hereby inserted into the Memorandum of
Understanding as a new Section 9:
9. AMR Transactions. "If the Memorandum of Understanding dated as
of January 9, 2001 (the "UAL-AMR MOU"), between UAL and AMR
Corporation ("AMR") or the definitive documentation with respect to
the transactions contemplated thereby (the "AMR Transactions") is
terminated (a) by AMR in accordance with the terms thereof as a result
of findings of AMR in the course of its due diligence expressly
permitted by the UAL-AMR MOU, (b) by either AMR or UAL in accordance
with the terms thereof at any time after August 1, 2001 as a result of
the AMR Transactions not having been consummated by such date, (c) as
a result of UAL informing AMR that it has reasonably concluded that
any applicable Regulatory Authority (as defined in the UAL-AMR MOU)
will not clear the UAL-US Airways Merger without changes or additions
to the AMR Transactions or (d) by mutual agreement of AMR and UAL,
then, in each case, Johnson shall cause the DC Air/AA Marketing
Alliance Letter Agreement dated as of January 9, 2001 (the "AMR-DC Air
Agreement"), among AMR, DC Air, LLC and Johnson to be terminated. In
the event the UAL-AMR MOU or the definitive documentation with respect
to the AMR Transactions is terminated for any reason other than as set
forth in the previous sentence, the parties acknowledge that the
AMR-DC Air Agreement shall remain in effect."
6. Attachment I to the Memorandum of Understanding is hereby
amended and replaced in its entirety by Attachment I hereto.
If you are in agreement with the foregoing, please so indicate by
signing the enclosed copy of this letter agreement and returning one signed
copy to me and one signed copy to the other party hereto. This amendment
shall become effective when signed by all the parties hereto.
UAL CORPORATION
By: /s/ Francesca M. Maher
__________________________
Name: Francesca M. Maher
Title: Senior Vice President,
General Counsel and
Secretary
Acknowledged and agreed this
9th day of January 2001
/s/ Robert L. Johnson
-----------------------
Robert L. Johnson
US AIRWAYS GROUP, INC.
By: /s/ Lawrence M. Nagin
____________________________
Name: Lawrence M. Nagin
Title: Executive Vice President,
Corporate Affairs and
General Counsel
ATTACHMENT I
DC Air
1. Potomac Air will be the vehicle to create DC Air. The parties will
reasonably agree as to any assets to be obtained by DC Air as part of
the acquisition of Potomac Ai which are in addition to the operating
certificate and other necessary authorizations and the assets
specified in this Attachment I.
2. Aircraft:
o 8 Dash 8-200 turboprop leases obtained as part of the
acquisition of Potomac Air
o 18 Regional Jets configured with 50 seats, operated by Mesa
and/or TransStates, under ASM purchase contracts currently in
place assigned to DC Air
3. Employees:
o Necessary management structure to appropriately manage DC Air's
operation
o All Potomac Air employees will stay with Potomac Air when it
transfers to DC Air, including the number and type of employees
required to operate the 8 Dash 8-200s
4. Slots:
o 118 air carrier (jet) slots and 104 commuter slots at DCA. DC
Air would also file to assume 6 EAS slots at DCA currently used
by Air Midwest to serve Lewisburg and Morgantown/Clarksburg,
West Virginia. If US Airways and/or its subsidiaries own more
than 104 commuter slots at DCA, then the number of such
commuter slots shall be increased by the amount of such excess,
and the number of jet slots reduced by the amount of such
excess, up to 12 slots
o Exact slot times will be determined by United, US Airways and
DC Air, so as to reasonably accommodate United's and DC Air's
scheduled services. The parties recognize that both United and
DC Air will need to make adjustments to ensure that both
parties may offer viable schedules
5. Airport Facilities:
o DC Air will assume the leases for the following assets (to the
extent suc assets are leased to US Airways) or otherwise
purchase from US Airways at fair market value:
- Seven gates at DCA (as previously identified by DC Air to
United), contiguous or reasonably contiguous, that are
appropriate for th operation of DC Air (necessary,
sufficient and reasonably suited).
- Ticket counter, ramp, aircraft parking, back office space,
etc. at DCA, same conditions (necessary, sufficient and
reasonably suited)
- Ground handling equipment, spare parts, and other related
assets at DCA, same conditions (necessary, sufficient and
reasonably suited)
The parties will reasonably agree upon the timing of the
transfe of the facilities at DCA identified above.
o United will provide DC Air with occasional use of the US
Airways' line hangar at DCA at market rates to be negotiated,
subject to United's operational requirements
6. Services:
o If requested by DC Air, United will provide the following
services at "Market Rate" (if a spread exists in market rates,
United will provide services a the low end of rates provided
for comparable goods and services, and DC Air will have
standard industry "out clauses") at those airports requested by
DC Air which are serviced by United but not by American
Airlines or American Eagle, provided, that with respect to LWB,
MGW and CKB, United's obligations under this paragraph shall be
solely to use its reasonable efforts to assist DC Air in
obtaining such services at Market Rate from United Express;
Schedule I sets forth a list of such airports:
- Fuel, including in-aircraft servicing, for a period of five
year
- Station handling, for a period of five years
- Customary occasional use gate agreements, if gate is
available when requested, for a period of five years
o If requested by DC Air, United will provide to DC Air interline
ticketing and baggage agreement (standard industry terms), for
a period of five years
7. Assignment: Buyer will not assign rights or obligations to another entity
8. Working Capital
o At time of closing Potomac Air will have $20 million in cash
which will stay with Potomac Air when it transfers to DC Air
9. Change of control: If Robert L. Johnson and his affiliates cease to
hold majority equity/control (other than through public offering) or
dispose of all or substantially all of the assets, United will have
no further obligations
10. Price: $141.2 Million plus (x) $250,000 of Potomac Air purchase
price, (y) an amount equal to the fair market value of assets (other
than leases) sold or contributed to DC Air or Potomac Air (other than
pursuant to paragraphs 2, 3, 4 and 8 above, the shares of stock of
Potomac Air and the operating certificate and similar authorizations
of Potomac Air) (DC Air anticipates such amount to be approximately
$8 Million) and (z) $20 million of cash pursuant to paragraph 8.
11. Liabilities: Buyer will assume in the definitive documentation all
liabilities primarily related to the DC Air business
12. Indemnification: United's obligation to indemnify Buyer in the
definitive documentation shall be limited to (x) in the case of
losses relating to any breach of a representation or warranty, 40% of
the purchase price paid to United by Buyer, and (y) in the case of
all losses, the purchase price paid by Buyer
SCHEDULE I
Allentown, PA (ABE)
Roanoke, VA (ROA)
Charleston, SC (CHS)
Charleston, WV (CRW)
Columbia, SC (CAE)
Lewisburg, WV (LWB)
Morgantown, WV (MGW)
Clarksburg, WV (CKB)
