FRIDAY, JANUARY 12, 2001 American Airlines by Frank Swoboda and Don Phillips The Washington Post January 7, 2001 WASHINGTON - American Airlines Inc., in a surprise move, this week is to announce plans to buy financially troubled Trans World Airlines Inc., effectively ending one of the oldest names in U.S. aviation history, in dustry sources said Sunday. At the same time, American has reached an agreement to buy 49 per cent of DC Air, the airline being cre ated by Black Entertainment Televi sion founder Robert Johnson, and is close to a deal with United Airlines Inc. to jointly operate the US Air ways Shuttle on routes from Wash ington to New York and Boston. All three deals are to be announced Wednesday, sources familiar with the negotiations said. Cost figures were not available Sunday. The moves are part of a complex deal designed to address federal an titrust concerns about United's pro posed merger with US Airways Group Inc. as well as to improve American's competitive position in the United States. The acquisition of TWA would make American compa rable in size to the combined United and US Airways after the planned merger. United already is the nation's largest airline. As part of the TWA deal, sources said the St. Louis-based airline would file for Chapter 11 bankruptcy protection from its creditors Wednes day and American would buy all TWA assets and preserve the jobs of its 20,000 employees. The acquisi tion of TWA's St. Louis operation would give American a much needed third mid-continent hub along with Chicago O'Hare Interna tional Airport and Dallas-Fort Worth International Airport, where it has run out of room to expand. Ameri can is a subsidiary of AMR Corp., which has its headquarters at Fort Worth. FCC may challenge AOL's grip on instant messaging by Alec Klein The Washington Post January 9, 2001 America Online Inc. has long played down the financial potential of its popular instant-messaging soft ware. "We've always viewed it as a fea ture, not a business," chief executive Steve Case told Congress in Septem ber, arguing that it shouldn't be in cluded as part of the government's review of AOL's takeover of Time Warner Inc. "It's not really a revenue generating business for us." It is now. In recent months, AOL has transformed the product that first caught on with teenagers as a way to trade quick messages into a money making enterprise raising new ques- dons about whether AOLhas a finan cial incentive to use its current domi nant position in instant messaging to unfairly thwart competitors. The company has placed several big advertisers'on the pop-up window that appears on millions of computer screens when users activate the soft ware. The advertisers include Gymboree Corp. and Universal Stu dios' hit movie "How the Orinch Stole Christmas," AtL's two instant-messaging ser vices 4 AOL Instant Messenger and ICQ, count more than 140 mi ll ion registered users worldwide far than any of the „,,,,.. more ~1 „A . _ wmPany s rivals, in . `''''.“4.4s.6 Y a hoo Messenger and Microsoft's MSN Messenger Ser vice Many analysts believe i caging is bec omin g i nstant mes ovo Lion lu the next great In communications to n . vai the telephone. 4 6 ,01. is build ing a time Its advertising base at when there is at , competitor aldi of comparable srae , °ugh Yahoo and Microsoft a re Piling Vound The Federal Trade Commission, ; which has jurisdiction over antitrust Paw revie wed theinstant Y,rnstant-mes I ins questions and decided - ~ to approve m merge r last month without attach " aspect of log conditions to thatthe The purchase of TWA, which has twice filed for bankruptcy protec tion, would consign the airline to the ranks of such departed carriers as Pan American World Airways and Eastern Airlines. American does not plan to continue the TWA name, sources said. TWA officials declined to com ment on the purchase. Other airline industry officials would not speak for attribution. The agreements are expected to head off the concerns of congres sional critics who have indicated that the United-US Air- would touch off another major round of consolidation in the airline MMus- With American's planned purchase of TWA and the Justice Depart ment already hav- ing signed off on an alliance agree meat between Northwest Airlines Corp. and Con tinental Airlines Inc., Delta Air Lines Inc., the remaining major airline, would he left with no major carrier with which to merge. Although the United and DC Air agreements are designed to satisfy antitrust concerns, sources close to the ne;.!otiatiotH said there was no guarantee the moves would satisfy the go\ eminent. A source empha sized that Justice Department anti trust officials did not specify any of the moves beimi taken in the Ameri- can agreements. - They just said. 'Here are our concerns, you go and find the solutions to them, — the source said. "This will handle most of the an titrust issues, - said Darryl Jenkins, a professor at George Washington University who specializes in airline economics. "This one deal will make the merger of United and US Air- deal. The Federal Communications Commission is now weighing in, the last federal agency that must approve the deal before it is made final. The FCC has statutory responsibility to examine whether a merger would serve the "public interest," and it is under that authority that officials there are raising questions about how AOL runs its instant-messaging services. Barry Schuler, AOL's president of interactive services, said this week that Case wasn't misleading members of Congress about the importance of instant messaging because it isn't "big business." "That's not to say there's not rev enue associated with it. There is," Schuler said, adding that AOL is in the early stages of determining what business model it will use for instant messaging. "This is all experimenta tion." Schuler declined to say how much revenue it generates, characterizing the amount as "very, very small." AOL competitors say it's important for federal regulators to view instant messaging not simply as a feature, but as a business that AOL could domi nate and extend beyond enabling real time exchange of text messages. Some believe, for instance, the service could become the preferred way to ex change music and videos. Instant mes saging could become even more übiq uitous as the technology migrates to wireless phones and other devices.. "This is growing more rapidly than e-mail. What would happen if one company had a monopoly on e-mail?" said Jon Englund, vice president for policy and government affairs at Ex cite At Home, an Internet service of fering a rival instant-messaging prod uct. "In some ways it's more important than e-mail. It gives you the ability to communicate with people in real time. That means that AOL will have a way to drive the Internet's future killer ap plications," Englund said. AOL officials denied the company tries to Ix= competition, noting that AOL freely licenses its software to VVOPLD Lr 1 fATlOl\f ways likely." Details of the agreement between United and American are still being wrapped up, but the agreement with DC Air was basically a done deal, sources said. The purchase of 49 percent of DC Air by American would take the new airline out from under the influence of United. DC Air was being crafted from the merger of United and US Airways. US Airways is the largest airline operating at Reagan National Airport in Washington. To avoid an titrust problems, US Airways agreed "American is gaining a jewel , " whroues ere t the Justice De -Darryl Jenkins, a prokssor at George Washington University who specializes in airline economics. to sell most of its "slots - - departure and landing rights - there to Johnson, who agreed to continue serving the 43 smaller cities now served by US Airways. Under the initial proposal, United would provide jet aircraft and crews to DC Air until it could provide its Own equipment and crews. Ameri can, a major competitor of United, will now provide those planes and Johnson has said that a buyer with a minority stake in DC Air would have first right of refusal to buy the government-restricted access to Reagan National airport. The airport is one of two airports - the other is New York's LaGuardia Airport - where the federal government con trols access to the airport to curtail congestk American has the right of refusal if Johnson decides to sell his airline, other companies. Some FCC officials want to impose conditions on the firm guaranteeing that it will allow rival instant-messag ing systems to connect to its own. AOL has refused to make its software interoperable with others, saying it is concerned about users' security and privacy. An FCC decision could occur this week. AOL. based in the Washington suburb of Dulles, Va., AOL and Time Warner of New York announced their $lB3 billion marriage a year ago and have been working ever since to se cure all the necessary regulatory ap provals. AOL notes that users can download the software free from the Web, and they do not have to be AOL subscrib ers to sign up. AOL recently started selling promotional space to big ad vertisers whose banner ads appear inside a pop-up box that lists a user's instant-messaging "buddies." When users click on the banner ad, they are taken to that advertiser's Web site. Most other instant-messaging systems, including Microsoft's MSN Messenger Service, also sell banner ads. Although no firm market share numbers are available, Internet re search firm Media Metrix released a report in November that measured growth in instant-messaging use, comparing August 1999 with August 2000. It measured only actual use, based on company surveys, rather than the number of registered users. Media Metrix found that 21.5 million people in the United States used AIM in August 2000 and 9.1 million used ICQ. Yahoo had 10.6 million and Microsoft had 10.3 million. Youssef Sgtudi, an analyst with , in vestment bank ING !Wings LLC, estimates that as of Sept. 30, the end of AOL's first quarter, the company had a backlog of about $lOO million in instant-messaging revenue for its ICQ service alone, including banner ads. That figure represents how much advertisers have committed in con tracts to spending. I."*. to buy TWA said a source familiar with the DC Air agreement Details of the agreement being worked out between American and United, has United selling American 86 jet aircraft, ranging from Folker 100 s and MD-80s to Boeing 7575. American plans to use the Folkers, II of them at first, for DC Air; the rest would be used for its TWA operation, sources said. American also has the world's largest fleet of MD-80s. American also has agreed to pro vide competition for United on five routes from US Airways hubs where United and US Air- routes involve Charlotte, Pittsburgh and Philadelphia, a source said. Three of the routes are from Philadelphia to San Jose, Denver and Los Angeles; another is from Charlotte to Chicago's O'Hare airport and the fifth is from Pittsburgh to Reagan National in Washington. In exchange, United plans to sell American coveted slots at airports in the eastern half of the nation from New York to Atlanta. American would pick up at least five slots at LaGuardia Airport, three at Reagan National, four at Boston's Logan International Airport and one each at airports in Newark, Philadelphia, Atlanta. Perhaps the most novel agreement involves the hourly US Airways Shuttle service between Washington and New York, and New York and Boston. United would get the shuttle under its merger deal with US Air ways, but under the agreement be- One Clinton's arrival, another's adieu by Dale Russakoff The Washington Post January 7, 2001 NEW YORK - New York Sen. Hillary Rodham Clinton had her of ficial swearing-in Wednesday on the Senate floor, followed by the tradi tional mock swearing-in in the Old Senate Chamber, where she and Vice President Al Gore reenacted the cer emony to allow for photographs, which are prohibited on the Senate floor. And then Sunday came what every one here called the "real swearing-in - a swinging, swaying, celebrity-stud ded, standing-ovation-tlooded affair on the stage of Madison Square Garden's theater, with Gore again do ing the honors and President Clinton telling the crowd of 2,000 in his folksiest style, "Help my wife do a good job at what she ran for." Even the three opening prayers - by an African American minister, a fe male minister and a rabbi - were in terrupted by applause, starting when one minister thanked God "that You did not let the chads or the chadettes come to New York City" and continu ing through each mention of Hillary Clinton, Bill Clinton or Al Gore. "I have never heard so many ap plause lines in prayers - and I'm a Baptist!" Gore said to roars of laugh ter and, of course, more applause. The New York State Democratic Party sponsored this reenactment of the reenactment of the swearing-in to give Clinton's New York friends and supporters a chance to get in on her victory celebration and to thank them for their work, party officials said. The event was open only to invited guests, and most people interviewed said they had received invitations, unsolicited, in the mail. But one man said he re ceived a call from a Clinton fundraiser, which he took as a "heavy suggestion" that he should give money to the Clinton campaign com mittee in return for his ticket. "I gave $400," said the man, who asked to remain anonymous. He said he also had contributed to Clinton's primary and general election cam paigns. tween United and American, the two airlines would jointly operate the shuttle. United and American would alternate hourly, with each airline flying under its own banner and col ors. The airlines would not share rev- "Whoever carries the passengers gets the revenue," a source said. The shuttle would continue to operate from the same gates and each airline would honor the other's tickets for the shuttle. American's purchase of TWA makes enormous sense for American, ana- Ivsts said TWA once was an aviation pow erhouse, vying with Pan American World Airways for global travel dominance. But like Pan Am, TWA did not fare well after the airline in dustry was deregulated in 1978. ways now compete, Yet TWA owns one of the nation's smoothest flowing hubs, St. Louis, which almost sits astride the geo graphic center of the country's popu lation. And although most of its air craft are leased, TWA operates one of the most modern fleets in the United States. partment has ex- pressed concern about fu ture lack of cornpeti- - American is gaining a jewel,' Jenkins said TWA's costs are unusually high, Jenkins said, because the airline has no credit. Thus, TWA cannot hedge on fuel prices and its aircraft lease fees to Boeing Corp. are steep. But with American's expertise and financial power, he said, "all of a sudden you have a premier airline." As part of the bankruptcy tiling, the lease agreements would he renego tiated. In recent months TWA has been the subject of a several offers, but mostly for parts of the airline, and none to buy the entire airline. TWA President Bill Compton told key company officials Friday that he thought he had found a "white knight" to buy the airline, but he would not identify the buyer or the bankruptcy plan, a source said. "I'm kinda tickled about living in New York, I feel kinda like Garrison Keillor feels about Lake Wobegon. Here I am in New York, where all the writers, artists and ath letic teams are above average - and all the voters get their votes counted." Sunday's event began with the 105 voices of Buffalo's Friendship Bap tist Church choir warming up the au dience with the national anthem and the "Battle Hymn of the Republic." Next came opera soprano Jessye Norman singing "You'll Never Walk Alone," followed by Nobel Prize winning author Toni Morrison read ing from her book "Jazz." The crowd was in a frenzy by the time Billy Joel concluded the artistic portion of the program with "New York State of Mind." Hillary Clinton drew riotous ap plause as she pledged to serve all New Yorkers, but it was clear that these New Yorkers were applauding both Clintons. "I feel like I'm saying, 'Six Effects of `Virginity Pledges' The Washington Post January 7, 2001 As part of a campaign launched in 1993 by the South ern Baptist Church, more than 2.5 million American adoles cents have taken public "virgin ity pledges" in which they prom ise to abstain from sex until mar riage. A new study has found that, for the most part, they mean it. At least for a little while. Peter S. Bearman of Columbia University and colleagues ana lyzed the results of questions about virginity pledges included in a federally sponsored survey of 90,000 seventh- through 12th graders conducted in 1994 and 1995 at 145 randomly selected U.S. middle schools and high schools. On average, adolescents who made a pledge delayed having sex about a third longer - about 18 months - than those who did not, according to a report that is scheduled to appear in the Janu ary issue of the American Jour nal of Sociology. But the power of the pledge appears to depend on age. The greatest effect was on 16- and 17-year-olds, and the least effect was on those 18 or older. "Pledging delays intercourse only in context where there are some, but not too many, pledg ers. Too few, and too many, pledgers in the adolescent world can negate the pledge effect," the researchers say. -President Bill Clinton more years!" . said Andrew Mark, a New York inventor and supporter of both Clintons who came to the cel ebration with his son David, 17. "For me, she's the continuation." Clinton the president made clear that he plans to work alongside Clinton the senator. As I Clinton did as first lady, Senate spouse Bill Clinton referred to his wife's agenda as what "we" want to do. "Fm kinda tickled about living in New York," Bill Clinton said. "I feel kinda like Garrison Keillor feels about Lake Wobegon. Here I am in New York, where all the writers, artists and athletic teams are above average - and all the voters get their votes counted."
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