Justice Department sues to block AMR-US Airways merger

Thursday, 15 August 2013 00:00 -     - {{hitsCtrl.values.hits}}

Reuters: The Justice Department sued on Tuesday to block the merger of American Airlines’ parent company AMR Corp and US Airways Group Inc, saying the deal would hurt consumers by leading to higher fares and fees. The US$ 11 billion merger would create the world’s largest airline, after four other major US carriers combined in recent years, narrowing the field of large US airlines. The antitrust lawsuit, filed in US District Court for the District of Columbia and joined by several states including Arizona and Texas, drew concern from industry experts and support from consumer advocates. US Airways fell 8.4% at US$ 17.23. American shares, which are thinly traded, were down 44.5% at US$ 3.22. The Justice Department seeks to block the merger, “because it would eliminate competition between US Airways and American and put consumers at risk of higher prices and reduced service,” Bill Baer, head of the Justice Department Antitrust Division, said in a statement. “Both airlines have stated they can succeed on a standalone basis, and consumers deserve the benefit of that continuing competitive dynamic,” Baer said. AMR and US Airways did not immediately respond to requests for comment on the suit. The two airlines secured European Union approval for the proposed merger on 5 August after promising to surrender slots at two airports, London’s Heathrow and Philadelphia in the United States. The Justice Department said it was concerned that if the merger went through, four airlines would control more than 80% of the US commercial air travel market. At Reagan National Airport in Arlington, Virginia, the one closest to Washington, the combined company would control 69% of the take-off and landing slots, the department said. But industry experts said the move was out of step with past practices and would potentially leave US Air and American, which is emerging from bankruptcy, at a competitive disadvantage.