Delta to Buy Rest of Carrier in Southeast

ATLANTA —  Delta Air Lines Inc., the No. 3 U.S. airline, said Tuesday that it will buy the remainder of Atlantic Southeast Airlines for about $700 million, sealing its relationship with a partner that feeds it passengers in the Southeast and Texas.

Delta already owns 28% of the regional carrier’s parent, ASA Holdings Inc. Delta will pay $34 for each share it doesn’t already own, a 6.5% premium over Friday’s closing price. Both are based in Atlanta.

ASA’s Delta Connection feeds passengers into Atlanta and Dallas/Fort Worth for Delta flights. The purchase protects that important traffic amid recent moves by AMR Corp.’s American Airlines and UAL Corp.’s United Airlines to link with or buy other small carriers that also work with Delta.

Shares of Delta, which had fiscal 1998 revenue of $14.1 billion, fell 6 cents to close at $52.25 on the New York Stock Exchange; ASA rose $1.81 to $33.75 on Nasdaq.

ASA, with 1998 sales of $410 million, has 28.5 million shares outstanding. Atlantic Southeast flies to 55 destinations from Atlanta and Dallas/Fort Worth.

Delta will operate ASA as a wholly owned subsidiary and keep its separate work force, allowing it to avoid the kind of labor unrest that nearly shut down American this month in the aftermath of its purchase of regional low-fare carrier Reno Air. Specifically, Delta said it won’t combine Atlantic Southeast’s pilots with Delta’s.

Pilots Pay: American Airlines’ pilots union paid $10 million to a federal court in Dallas as a deposit on a fine for damages caused by a 10-day sickout, court officials said.

The Allied Pilots Assn. may wind up having to pay even more after a court hearing scheduled today to determine exactly how much money American lost in the slowdown that stranded or delayed more than half a million passengers.

American said its operations are largely back on schedule, with just a handful of flights canceled.

Phones Allowed: Northwest Airlines has loosened its rules on the use of cellular phones aboard aircraft and in jet ways. Effective immediately, Northwest passengers may use their cell phones aboard planes and in the jet ways connecting planes and terminals whenever at least one of the aircraft doors is open. Northwest’s new policy is similar to that of its alliance partner Continental Airlines.

Carry-On Plea: The chief executive of the world’s No. 1 carrier, United Airlines, personally urged passengers to cooperate with its policy of limiting the size of carry-on baggage to keep flights running promptly. “People try to bring on tractor tires and half-size refrigerators,” CEO Gerald Greenwald said in a speech in Boston. Airlines are facing several proposals in Congress, including two so-called passenger bill of rights that would force airlines to refund tickets and pay fines for lost luggage or delays, Greenwald said.