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Trump Shuttle May Soon Have New Name: USAir

December 19, 1991

NEW YORK (AP) _ USAir reached a preliminary deal Thursday to fly and possibly purchase the Trump Shuttle, after American Airlines withdrew its bid to run the carrier that caters to Northeastern business travelers.

The deal would represent a further consolidation of the air travel industry, while symbolizing the decline of developer Donald J. Trump’s crumbling empire as his name is painted off the airplanes.

USAir said it plans to rechristen the airline ″The USAir Shuttle.″

USAir was negotiating with Trump and his bankers on an arrangement to let USAir fly the shuttle for up to 10 years, giving the carrier a stronger presence in the Northeast corridor.

USAir, based in Arlington, Va., would also get an option to buy the shuttle after five years, under the deal that must be approved by Trump Shuttle creditors.

″We expect that a definitive management agreement will be reached shortly after the first of the year,″ said Seth E. Schofield, USAir’s president and chief executive. The shuttle offers frequent nonstop service between New York, Boston and Washington.

USAir, Trump and Citibank, which represents the shuttle’s creditors, declined to discuss specifics of the deal.

But two executives familiar with the negotiations, speaking on condition they not be identified, gave different versions of the package.

One executive said USAir would put up $25 million to run the shuttle, getting a small stake of the airline, with an option to buy the rest for a price in excess of $360 million after five years. Trump’s debt of $360 million from the shuttle purchase will be erased by the deal, that executive said.

That was the price paid when Trump bought the shuttle in 1989 from now- defunct Eastern Airlines. The executive said USAir, Trump and the bankers will all get money from the shuttle’s operations.

A different executive said USAir was putting up money, but the figure of $25 million was ″high.″ That second executive said USAir will hold a 40 percent stake in the shuttle with an option to buy the rest in five years for an undetermined price.

The second executive said profit from the shuttle’s operations will go toward paying off some $275 million in loans on the shuttle. In addition, $100 million of a $135 million personal loan to Trump will be forgiven by his banks. Trump will still owe $35 million, that executive said.

Although USAir will not get money from the operations of the shuttle ″they have the benefits of ownership for what in effect is a low-cost upfront option″ to buy an airline in the lucrative Northeast markets, the executive said.

As Trump’s business has fallen onto hard times, Trump stopped making interest payments on the shuttle. Bankers have been seeking someone else to take control.

Trump, asked in a telephone interview whether he considered the removal of his name from the shuttle to be a personal blow, said he did not.

″It’s been a success in many respects, but we’re in a depresssion,″ said Trump, who has put his name on so many other things such as skyscrapers and Atlantic City casinos. ″I don’t have any regrets. We come out whole and have no regrets.″

After American pulled out of the running, USAir was apparently the only candidate left.

Northwest Airlines had come close to flying the shuttle this past summer, but the arrangement fell apart when Northwest and Trump’s bankers could not come to terms.

American said it broke off talks about running the shuttle because it could not reach an agreement with its pilots union over who would fly the Trump Shuttle planes.

American wanted to manage the shuttle with its existing workers and work rules. But the unionized American pilots had insisted on flying the shuttle planes, making the deal less financially attractive to American, said an industry source who spoke on condition of anonymity.

″We believe American could have enhanced service for shuttle customers and, at the same time, strengthened American’s presence in the important Northeast marketplace,″ said Donald J. Carty, American’s executive vice president for planning and finance.

USAir has been thinking the same thing.

″We do not have any nonstop service between Washington National and any of the major New York airports,″ USAir spokeswoman Susan Young said.

If USAir ends up running the Trump Shuttle, its main competitor will be Delta Air Lines, which recently purchased a similar shuttle from now-defunct Pan Am.

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