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DOT Official Urges OK for Northwest, Republic to Merge

June 28, 1986|ROBERT E. DALLOS | Times Staff Writer

NEW YORK — A key official of the Department of Transportation recommended Friday that the government approve the proposed merger of Northwest Airlines and Republic Airlines despite the opposition of the Justice Department.

The $884-million purchase of Republic by Northwest would create the nation's third-largest airline behind United and American. The merged airline would have 298 airplanes, a work force of 30,000 and a route system serving 100 domestic cities and 25 abroad.

Under the agreement reached by the two companies and announced in January, Northwest's parent company, NWA Inc., would purchase all of Republic's common shares for $17 each.

Ronnie A. Yoder, a Department of Transportation administrative law judge, said Friday that the merger is in the "public interest." The Justice Department in February expressed concern that 45 cities were served by both carriers, that both airlines have hubs in Minneapolis/St. Paul and that there would a reduction or absence of competition in some markets.

2nd Positive Opinion

But Yoder said in the decision: "The proposed merger . . . has not been found to substantially reduce competition in any relevant market or to be contrary to the public interest and should be approved."

Friday was the second time that an official of Department of Transportation came out in favor of the merger. Earlier this month, a DOT public advocate urged approval of the deal and concluded that it would not be anti-competitive.

Transportation Secretary Elizabeth Hanford Dole is expected to rule on the merger by the end of July. She may overturn, accept or modify the agreement. President Reagan has the final authority.

"We have always felt that this merger should be approved and that it did not present anti-competitive problems," Helane Becker, airline analyst with the New York investment banking house of Drexel Burnham Lambert, said.

"As you can imagine, we are very pleased," William Wren, a Northwest spokesman, said. Stephen M. Wolf, Republic's president, said Yoder's recommendation "reflects our firm belief that the merger will enhance competition. The combined airline will ensure quality service, attractive fares and convenient schedules."

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