Antitrust Law

Justice Department sues to block proposed merger of American Airlines with US Airways

The U.S. Justice Department has filed an antitrust suit in an effort to block the $11 billion merger of American Airlines with U.S. Airways.

The merger would create the world’s largest airline and hamper competition, the Justice Department says. The Associated Press, Bloomberg News, the New York Times DealBook blog, the Wall Street Journal (sub. req.) and the Dallas Morning News Airline Biz Blog have stories.

“This merger will leave three very similar legacy airlines—Delta, United and the new American—that past experience shows increasingly prefer tacit coordination over full-throated competition,” according to the suit (PDF) filed in Washington, D.C., federal court. The complaint says the merger would give the new company control of nearly 70 percent of the takeoff and landing spots at Washington’s Reagan National Airport. “Competition at Reagan National cannot flourish where one airline increasingly controls an essential ingredient to competition,” the suit says.

Attorney General Eric Holder said in a statement that the merger “would result in consumers paying the price—in higher airfares, higher fees and fewer choices.” Five states and Washington, D.C., also joined the lawsuit.

Bloomberg said the challenge upends American’s plans to exit bankruptcy through the merger.

According to the Airline Biz Blog, the suit is the Justice Department’s first challenge to a major airline merger since May 2000, when it objected to the merger of US Airways and United. The department had approved the merger of Delta Air Lines and Northwest Airlines in 2008, United Airlines and Continental Airlines in 2010, and Southwest Airlines and AirTran Airways in 2011. “But the American-US Airways apparently was one merger too far for the Justice Department,” Airline Biz Blog says.

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