USAIR MERGER NEWS UNSETTLES FORWARDERS

USAIR MERGER NEWS UNSETTLES FORWARDERS

The surprising announcement that troubled USAir Group Inc. is seeking a marriage with either United Airlines or American Airlines has generated concern among freight forwarders, industry analysts and Wall Street.

"From our standpoint, it makes for too much of a monopoly," said Dennis Costin, president of Kamden International Shipping, a freight forwarder in New York. "We've already seen passenger rates go up and up and up. This would make one of two giant carriers that much larger. It could hamper our ability to get good rates."USAir, which lost nearly $685 million last year, announced Monday that it was holding discussions with UAL Corp., parent of United, and AMR Corp., parent of American.

The news was greeted with dismay on Wall Street, where UAL and AMR stock prices fell slightly in early trading Tuesday.

Steve Lewins, a transportation analyst with Gruntal Investment Research, discounted the possibility that the talks would lead to a merger.

"I think this thing is dead already," he said. "It was too premature for an announcement. I think they probably made the announcement for fiduciary reasons."

UAL executives told industry analysts in a conference call Monday night that it made the announcement because it expected that its employee owner groups would release the information.

UAL said it was evaluating whether or not it should submit a proposal to ''acquire USAir's business and operations."

USAir, based in Arlington, Va., is hurting. The company has lost $3 billion in the past six years. Furthermore, the airline's reputation has suffered badly in the wake of several crashes in recent years - including one near Pittsburgh in which 132 people perished. USAir also is suffering from a variety of union-related disputes.

Another factor working against a sale to UAL or AMR is that British Airways owns nearly 25 percent of USAir. British Airways, United and American all compete for trans-Atlantic passengers and revenue.

For its part, British Airways confirmed that the talks had been undertaken with its knowledge.

''We will now evaluate a number of interesting options that may become open to us in relation to our investment in USAir and our future alliance strategy in North America," it said.

American and United, the No. 1 and No. 2 airlines in the United States, are doing rather well. AMR posted $228 million in profit last year. UAL had a profit of $51 million.

USAir has hubs in Baltimore, Philadelphia, Pittsburgh and Charlotte, N.C. The airline's cargo revenue in 1994 stood at $160.3 million.

According to Mr. Costin, should either United or American purchase USAir, the resulting giant would have a near stranglehold on domestic cargo markets. Furthermore, such a combined airline also would certainly become the world's dominant airline in terms of revenue and routes. That, however, might not turn out to be such a bad thing for freight forwarders.

"Some of the foreign carriers might come in with some deep discounts," he said. "It could start a rate war. It's just too early to tell."