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BRITISH AIRWAYS TO INVEST $750 MILLION IN USAIR; FIRST STEP IN CREATION OF WORLD'S LARGEST OF AIRLINE ALLIANCE

 BRITISH AIRWAYS TO INVEST $750 MILLION IN USAIR;
 FIRST STEP IN CREATION OF WORLD'S LARGEST OF AIRLINE ALLIANCE
 NEW YORK, July 21 /PRNewswire/ USAir and British Airways today announced agreement to form the world's largest airline alliance that will strengthen both carriers and provide substantial increases in benefits to the customers, shareholders and employees of both airlines.
 The proposed transaction calls for British Airways to make an investment of $750 million in USAir for which British Airways will receive convertible preferred shares, representation on the USAir Board, and a joint commitment to integrate the activities of the two airlines.
 "Our proposed alliance with British Airways will position USAir to be an even stronger competitor," said USAir Chairman and President Seth E. Schofield.
 "This arrangement also ensures the long-term viability and strength of USAir as a major U.S. carrier to the benefit of our customers, shareholders, approximately 47,000 employees, and the more than 260 cities that rely upon USAir and our USAir Express affiliates as a provider of scheduled air service."
 "This alliance will pave the way for a global airline group, providing superior service, better value for customers and, in the longer term, enhanced returns on our quarter of a million owners -- many of them Americans," said Lord King, chairman of British Airways.
 "It's good for customers, it's good for our shareholders, and it's good for our employees. It is also good for the economies of both home countries. We are delighted that it will also provide British Airways with the connections within the United States that we have sought for so long."
 The proposal will require approval of regulatory authorities in both the United States and the United Kingdom. Financing will take form of $520 million 7 percent Series "C" Convertible Preferred shares convertible into common stock of USAir at a price of $20.50 per share and initially representing 21 percent of the voting stock of the company.
 Twenty-one percent is the maximum voting stock that British Airways can hold under current legislation since some USAir stock is already held by non-U.S. nationals. The British Airways voting percentage can increase as the number of non-U.S. national holders declines, but will not, under current U.S. law, exceed the legal limit of 25 percent.
 The balance of the $750 million investment will be in the issuance of $230 million in Series "E" Convertible Preferred shares, which will also be convertible into common voting stock of USAir at $20.50. The stock will only have voting rights to the extent that the regulatory authorities permit.
 The total investment of $750 million will provide for approximately 44 percent of the overall equity of USAir.
 No conversion of the stock can take place within the first four years. After five years USAir has, under certain circumstances, the ability to require conversion of all the outstanding preferred shares, both Series C and E, to either common stock or to non-voting common stock according to the regulatory framework in place at that time.
 The holding of Series C voting shares gives British Airways representation on the USAir Board of Directors. The joint proposal calls for a USAir Board of 16 members (there are currently 13) of whom four will be representatives of British Airways. Up to two other directors will be interlocking independent directors serving on both the USAir and British Airways Boards. The transaction is fully consistent with current U.S. statutory requirements.
 Both British Airways and USAir are confident that the DOT will recognize the extensive consumer and economic benefits that would result from such an alliance.
 A joint committee of senior managers from both companies, led by their respective chief executives, will be appointed to identify all of the benefits and synergies of the new airline group.
 Each party has the right to terminate the investment agreement if all required shareholder and governmental approvals, including Department of Transportation, are not received.
 The transaction will result in the creation of the world's largest airline alliance in terms of passengers carried.
 -0- 7/21/92
 /NOTE: USAir Chairman and President Seth E. Schofield, along with senior British Airways officials, will hold a press briefing on the agreement between the two companies at 11 a.m. today (Tuesday, July 21) in the Cottillion Room of the Pierre Hotel, 2 E. 61st St., New York./
 /CONTACT: Dave Shipley of USAir, 703-418-5112, or Sandy Gardiner of British Airways, 718-397-4725/
 (U BAB) CO: USAir, British Airways ST: New York, Virginia IN: AIR SU: FNC JVN


TW -- DC001 -- 1060 07/21/92 07:33 EDT
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Publication:PR Newswire
Date:Jul 21, 1992
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