American, US Airways Settle DOJ Antitrust Suit, Merger to Proceed

By Paul Riegler on 12 November 2013
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American Airlines' new and old livery

American Airlines’ new and old livery

The U.S. Department of Justice announced a settlement with American Airlines and US Airways over their planned merger on Tuesday.

The two airlines will divest a total of 52 slot pairs at Washington Reagan National Airport and 17 at LaGuardia Airport in New York as well as an unspecified number of gates and some related facilities.   The airlines will also divest two gates at Boston Logan, Chicago O’Hare, Dallas Love Field, Los Angeles International, and Miami International airports.

In a statement released Tuesday, the two airlines said that, despite the divestitures, the combined carrier will generate more than $1 billion in synergies, which was the estimated amount at the time the merger was originally announced.

The divestitures will result in 44 fewer departures at Reagan National and 12 fewer at LaGuardia, a 15% and 7% reduction respectively.

The airlines also promised to maintain much of the currently operated service to small- and medium-sized communities from Reagan National.

The two airlines also announced a settlement with the state attorneys general who had objected to the merger.  In the settlement, the airlines said they will maintain hubs in Charlotte, Chicago (ORD), Los Angeles, Miami, New York (JFK), Philadelphia, and Phoenix for a period of three years.  They also agreed to continue the current daily scheduled flights from its hubs to the airports in the attorneys general’s home states.  The participating attorneys general were Texas, where American Airlines is headquartered, Arizona, where US Airways is headquartered, Florida, the District of Columbia, Pennsylvania, Tennessee, and Virginia.   Texas later dropped its opposition to the merger.

The merger was originally announced in February and the Department of Justice filed suit in August to block it on antitrust grounds.

The combination of the number three and number five airlines would create the world’s largest airline by passenger traffic.

In its initial filing, the Department of Justice argued that the merger would harm consumers by reducing competition, increasing airfare costs, and reducing service to more densely populated areas.

(Photo: Accura Media Group)

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