NEW YORK -- USAir and creditors of the Trump Shuttle agreed in principle Thursday for USAir to manage and operate an hourly Washington- New York-Boston shuttle for a period of up to 10 years.
Under the accord, USAir would assume a small ownership stake in the shuttle now, with an option to buy it outright at the end of five years.
Financial details were not announced.
One source speculated that the deal would relieve shuttle owner Donald J. Trump of some $360 million in debt, including $100 million which he personally guaranteed.
Other debt relief estimates were lower. One skeptical analyst said he didn't think 'USAir was just going to take the (Trump debt) problem off the banks' hands, that's for sure.'
Trump was forced to cede control of the shuttle to his creditors earlier this year as part of the beleaguered ex-billionaire's downsizing of his debt-laden real estate, casino, hotel and airline empire.
The deal also sets the stage for a fierce aerial battle in the important Northeast Corridor market between USAir and Delta Airlines, which took over the competing shuttle formerly run by now-defunct Pan American World Airways on Nov. 1.
'We'll see a highly competitive market,' said airline analyst Julius Maldutis of Salomon Brothers Inc. 'Both (USAir and Delta) will improve the quality of service, so the passengers will obviously benefit.
Estimates of the shuttle's share of the Washington-New York-Boston shuttle market vary. Trump says it has 50 percent, while analysts say it's somewhat less.
The transaction is subject to approval by Trump Shuttle bank creditors, led by Citicorp. USAir will change the name of the operation to 'The USAir Shuttle.'
USAir expects a definitive management agreement to be reached 'shortly after the first of the year' -- but the Arlington, Va.-based airline said it would provide no further details until a final agreement is reached.
Trump expressed satisfaction with the deal as one which was beneficial to all parties -- himself, the banks and USAir.
'USAir thought the shuttle was a great thing to have. It would be a great feeder system for them. We wanted them because their enthusiasm for the shuttle would be very great,' Trump said.
'I could hang on to (the shuttle), but I'm getting a good price. I feel I'm doing better for myself by selling at this time,' Trump said.
Trump bought the shuttle from now-defunct Eastern Airlines in July, 1989 for $360 million. At that time, a bitter strike and resulting service disruptions had slashed its slice of the Boston-New York- Washington shuttle business sharply.
The brash Trump boldly predicted that he would rebuild the shuttle into the dominant player in the market, restoring regular service and refurbishing planes and terminals to win back passengers. 'We did great,' he claimed. 'We took it from 14 percent market share to over 50 percent,' although analysts dispute that figure.
Trump said the shuttle had been hurt by the general airline industry downturn brought on by higher fuel prices and the Persian Gulf War, but is now making 'a substantial operating profit,' to the point where several airlines other than USAir also expresssed interest in taking over its operation.
