Exclusive: State attorneys general probing American, U.S. Airways merger

Mon Jul 1, 2013 4:52pm EDT
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By Diane Bartz and Karen Jacobs

WASHINGTON (Reuters) - A group of 19 attorneys general, led by Texas, has joined a U.S. Justice Department probe of a planned merger of American Airlines Inc AAMRQ.PK and US Airways Group Inc LCC.N, three sources close to the discussions told Reuters.

Some of the states involved worry that they will lose a hub because of the planned transaction, which would create the world's largest airline, while others are concerned about service cutbacks to smaller cities because of the transaction, two sources said.

US Airways has hubs in Philadelphia, Charlotte, Washington, DC and Phoenix while American has hubs in Dallas/Fort Worth, New York, Miami, Chicago and Los Angeles.

US Airways announced on February 14 that it planned to merge with American, which is emerging from bankruptcy, in an $11 billion stock deal. The companies hope to wrap up the merger by the end of September.

The state attorneys general are working with the Justice and Transportation Departments, both of which must approve the deal.

A sticking point in talks between the Justice Department and the companies is whether the airlines will agree to sell slots - takeoff and landing rights - to reduce their dominance at Reagan National Airport outside Washington, D.C., according to two sources.

The involvement of the state attorneys general and the fact that the Justice Department is taking depositions indicates broad concern that the proposed merger creates antitrust problems, antitrust experts said.

The Justice Department can approve a deal on condition of asset sales or, rarely, will sue to stop it. It can also approve a deal without any conditions.   Continued...

An American Airlines aircraft is on the ramp at Dallas-Ft Worth International Airport February 14, 2013. REUTERS/Mike Stone