Few expect US Airways to give up its Shuttle, but a move by American Airlines to purchase the prestigious east coast operation, as well as possible interest from United Airlines, has introduced another twist in the carrier's continuing battle with unions.

US Airways operates, but does not own the Shuttle, which serves the high-yield Washington DC-New York-Boston market in competition with the Delta Shuttle. However, US Airways does have first rights to purchase the Shuttle and holds 47 per cent of its warrants.

Stephen Wolf, US Airways' chief executive, is believed to be reluctant to give up the Shuttle, which is owned by a number of banks and which helps to feed business travellers into the US Airways network. But protracted labour negotiations make this a bad time for Wolf to have his attention diverted. American Airlines' chairman, Robert Crandall, meanwhile, is hungry for the deal. 'It would be a very valuable, synergistic proposition. I want it very badly,' he says. United is also believed to be weighing up a bid.

The Air Line Pilots Association, which represents US Airways pilots, says it is 'highly doubtful' that US Airways would give up the option to purchase the Shuttle. Analysts also believe US Airways will take control.

Like the labour negotiations, however, the process could be lengthy. US Airways must first obtain a valuation for the Shuttle, which was bought in 1989 for $365 million, and decide whether to pay that price. If it baulks at the price the carrier still has first right to match any other offer. 'We are in the mid-process of the first phase - it could take a while,' says US Airways.


Source: Airline Business