USAIR PLANS MOVE TO CRYSTAL CITY

company's annual meeting yesterday that the airline will begin offering

first-class service, taking a page from the operations of Piedmont

Aviation Inc., which USAir acquired last year.

Although the shareholder meeting was generally uncontentious, the

company's shareholders nearly handed Colodny and USAir management a

major defeat. More than 47 percent of the company's stockholders voted

in favor of a shareholder resolution urging the company to rescind its

"poison pill" defense against a possible hostile takeover.

Supporters of the resolution claimed victory, noting that, because

of abstentions, more shares were voted in favor of the resolution than

voted with management against it. But USAir said it had won because

state laws in Delaware, where the company is incorporated, require that

shareholder resolutions pass by a majority, not just a plurality.

There were 14.898 million shares voted in favor of the motion,

13.781 million voted against it and 2.585 million abstentions. USAir

spokesman David H. Shipley said that Delaware law also gives the votes

of those who abstained to management.

The shareholder resolution was one of a wave of resolutions across

the country this year supported by major institutional investors seeking

to assert their rights. The sponsor of the USAir resolution was the

California Public Employees Retirement System, a huge fund that has more

than $46 billion in assets and owns more than 400,000 USAir shares.

The airline adopted the antitakeover defense in January 1986, when

rumors were surfacing of a potential takeover. The device adopted by

USAir is designed to force a potential bidder to negotiate with the

company's board by making it prohibitively expensive to take an offer

directly to shareholders without board support.

Richard H. Koppes, chief counsel to the California retirement fund,

spoke in favor of the resolution. The poison pill discourages takeover

bids and has an adverse effect on the value of the stock, he said. It

also "offends the notion of corporate democracy" because it was adopted

without consulting shareholders, he argued.

Even if passed, the resolution would not force management to drop

the poison pill, but only take it under advisement. But a spokesman for

USAir said management plans to meet with the California retirement fund

to discuss the issue.

"There are a lot of powerful shareholders flexing their muscles,"

said Peg O'Hara, director of the corporate governance service of the

Investor Responsibility Research Center Inc. The center tracks

shareholder proposals.

O'Hara said the USAir vote was the largest this year in favor of

rescinding a poison pill defense.

Meanwhile, the airline said it is within days of signing a 20-year

lease with the Charles E. Smith Co. for space in a new building that

will be called the Crystal Park Four. USAir will lease 250,000 square

feet in the building with an option on an additional 75,000 square feet.

The only other tenant will be the Charles E. Smith Co. Airline officials

would not say what USAir will pay for the space, which will allow it to

consolidate its expanded operations. The move is expected to be

completed in November.

Colodny also announced that USAir will begin offering customers the

option of first-class service sometime in early 1989. USAir has operated

single-class flights but elected to change as a result of its merger

last year with Piedmont, which has operated both first class and coach.

The change will require installing new galleys and seats in most of

USAir's fleet of 408 jet aircraft.