The Justice Department is suing to block the merger of American Airlines and US Airways, it said in a statement today.
The combination of the two carriers, announced in February, would create the world’s biggest airline, and bring American Airlines out of bankruptcy.
In its statement, the DOJ said the merger would “substantially lessen competition for commercial air travel in local markets throughout the United States and result in passengers paying higher airfares and receiving less service.
Since the challenge was made public, the stock price of American Airlines’ parent company, AMR Corporation, has collapsed nearly 35%.
In the past 12 years, a series of mergers has turned 10 major US airlines into just four, according to CNN Money. (That counts American and US Airways as having joined forces.) Delta paired with Northwest in 2009, United with Continental in 2010, and Southwest with AirTran in 2011.
The lawsuit, filed in the US District Court for the District of Columbia, “seeks to maintain competition in the airline industry.” The DOJ is joined by the attorneys general of Texas, Arizona, Florida, Washington DC, Pennsylvania, Tennessee, and Virginia.
Attorney General Eric Holder said that challenging the deal “proves our determination to fight for the best interests of consumers by ensuring robust competition in the marketplace.”
The DOJ rejects the idea that the merger is key to the survival of either airline. The complaint states, “American does not need this merger to thrive, let alone survive.”
In an August 5 statement, American Airlines said the resulting carrier “will become a highly competitive alternative for consumers” that “will offer customers more choices and increased service.”
The newly formed mega-carrier would take the name American Airlines, and fly 3,200 daily fights on 900 planes.
American Airlines says it will issue a press release shortly.
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