Justice Department details deal for American, US Airways fight

Mon Nov 4, 2013 6:53pm EST
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By Diane Bartz

WASHINGTON (Reuters) - The Justice Department wants US Airways and American Airlines to divest landing and take-off slots at Reagan National and other "key" U.S. airports as a condition to drop its effort to block a proposed merger, Attorney General Eric Holder said on Monday.

Share prices in the airlines jumped as Holder seemed to offer a path to an agreement, three weeks before the scheduled start of a trial on November 25.

The bankrupt AMR Corp AAMRQ.PK, parent of American Airlines, closed up 24.5 percent in heavy volume, while those of US Airways LCC.N at one point rose more than 5 percent to their highest in almost six years before retreating to close up 1.2 percent.

Holder said that talks with the companies were ongoing and he hoped for an agreement before the trial is due to start.

The Justice Department's complaint focused on the carriers' dominant position at Reagan National, outside Washington, and on more than 1,000 city pairings that American and US Airways now dominate. It said the merger would reduce choice for travelers and lead to higher fares.

Holder would not elaborate on Monday about whether the government has a specific number of slots in mind that the carriers need to sell to advance the deal. There were a "number of ways" to address the government's concerns, he said.

"What we have tried to focus on is to make sure that any resolution in this case necessarily includes divestitures of facilities at key constrained airports throughout the United States," Holder said.

"We hope that we will be able to resolve this short of trial, but if we do not meet those demands that we have, we are fully prepared to take this case to trial," he said. "We will not agree to something that does not fundamentally resolve the concerns that were expressed in the complaint."   Continued...

U.S. Airways jets are seen at Reagan National Airport in Washington July 12, 2013. REUTERS/Larry Downing