United CEO Wants U.S. to Ease Foreign Airline-Ownership Rules

April 21, 2005
United Airline's CEO said the U.S. government should ease rules regarding the foreign ownership of U.S. airlines and encourage the continued consolidation of the industry.
CHICAGO (AP) -- The U.S. government should ease rules regarding the foreign ownership of U.S. airlines and encourage the continued consolidation of the industry, United Airlines' chief executive said Thursday.

Glenn Tilton said during a speaking appearance in Chicago that ''inconsistent'' regulation has stunted U.S. airlines' competitiveness on a global scale.

Tilton said his company has stood on the sidelines as other major airlines merge to create ''super carriers'' that now have improved financial strength to compete.

''The signs are even clearer today than they were two years ago that the industry is moving toward a global industrial structure, similar to events we saw years ago in the auto industry and in telecommunications,'' Tilton said. ''What is not positive _ in fact, what is alarming _ is that the U.S. is not leading the process.''

Tilton said that, for the first time, U.S. carriers are no longer the largest, strongest companies. He said the U.S. government must develop aviation policy that permits airlines to behave like ''normal'' businesses.

Specifically, Tilton said the government should repeal a 1938 federal law that bars foreign ownership of more than 25 percent of a U.S. airline.

''This restriction has emerged as one of the most significant barriers to this industry becoming more global,'' he said, adding that the limits block badly needed capital investment.

When asked to comment on recent reports regarding a potential merger of America West Holdings Corp. and US Airways Group Inc., Tilton said he understands the position of both companies in pursuing a deal. He said restructuring can only do so much, and growth through a transaction becomes a necessary element.

''I applaud their view,'' he said.

Such consolidation may include United at some point down the road, Tilton said. He said the company, based in Elk Grove Township, Ill., was ''protecting its options'' regarding its restructuring, including potential consolidation upon emergence from bankruptcy.

United and its parent, UAL Corp., sought bankruptcy protection in December 2002.