American Airlines and US Airways have reached a settlement with the Department of Justice that will allow them to merge, the DOJ announced today.
Combined, the carriers will create the world’s largest airline.
In August, the DOJ filed a lawsuit to block the $US11 billion merger, a surprise move from an office that has allowed three major airline combinations in the past five years.
The DOJ argued the merger was not key to the survival of either airline, and the resulting loss of competition in the industry would “result in passengers paying higher airfares and receiving less service.”
The case had been set to go to trial on November 25.
According to the DOJ, the airlines will give up landing and takeoff slots and gates at seven “key constrained airports.” The slots will go to low cost airlines, “resulting in more choices and more competitive airfares for consumers.”
The airports are in or near Boston, Chicago, Dallas, Los Angeles, Miami, New York, and Washington, D.C. In a press release, Assistant Attorney Bill Baer, of the DOJ’s Antitrust Division, called the divestitures “extensive” and “groundbreaking.”
“This settlement will disrupt the cozy relaitonships among the incumbent legacy carriers, increase access to key congest airports and provide consumers with more choices and more ocmpetitive airfares on flights all across the country,” he said.
The deal will likely be supported by ALPA, which represents nearly 50,000 pilots at American and Canadian airlines, and by Airlines for America, the grade group who members transport more than 90% of U.S. airline passenger and cargo traffic. When the DOJ first sued to block the merger, both groups criticised the move, saying consumers are better off when airlines are stronger.
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