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Wednesday, Feb. 17, 1999

Delta to acquire Atlantic Southeast Airlines

In $700 million deal, carrier will operate as subsidiary, keeping separate workforce

By DAN SEWELL
Associated Press

   ATLANTA -- Delta Air Lines announced Tuesday it will acquire Atlantic Southeast Airlines, a regional carrier already linked to Delta routes, and run it as a subsidiary.
   Delta said the $700 million acquisition will increase efficiency and help growth plans for Delta and the regional carrier, which flies Delta customers under a code-sharing agreement in the Southeast and in Texas.
   Mindful of the recent pilots conflict that grew out of American Airlines' acquisition of a smaller carrier, Delta emphasized that ASA will retain a separate workforce and salary and benefits structure. There will be no integration of workforces or seniority lists, it said, and ASA's agreements with the Air Line Pilots Association and the Association of Flight Attendants will remain in place.
   Atlantic Southeast is Atlanta's largest regional air carrier with service to 37 markets. It also offers service to 21 airports from its second hub at Dallas-Fort Worth.
   ASA, founded in 1979, has operated as a Delta Connection carrier since 1984. It has a fleet of 88 aircraft with 2,673 employees based in 40 cities.
   (ASA flies four turbo prop flights from Corpus Christi International Airport daily. The company announced Feb. 5 that it will replace that route with two jet flights to Atlanta beginning May 1.)
   Andy Deane, a captain and a spokesman for Delta's pilots union, said there "don't appear to be any contractual problems" with the regional carrier.
   Disagreement over American's integration of Reno Air and the pay of its pilots led to the American pilots' sickout that resulted in thousands of canceled flights over the past week.
   Delta said Tuesday's deal with ASA is for growth, not cost-cutting.
   "As we build on ASA's strengths, we not only will improve Delta's overall route network, but we also will be in position to increase traffic flows to our other connection partners," said Leo F. Mullin, Delta's president and chief executive officer.
   Under terms of the agreement, a Delta subsidiary will make a tender offer to purchase all outstanding shares of common stock of ASA Holdings for $34 per share in cash. ASA Holdings has 28.5 million shares of common stock outstanding. Delta already owns 7,995,000 of those shares.
   The deal is subject to regulatory review.
   Business writer Andrea Jares contributed to this report. She can be reached at 886-3678 or by e-mail at jaresa@caller.com
   

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