US Airways, American to merge after settling antitrust suit

Tue Nov 12, 2013 3:44pm EST
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By Diane Bartz and Soyoung Kim

WASHINGTON/NEW YORK (Reuters) - US Airways Group Inc and American Airlines will give low-cost competitors more access to a half dozen key U.S. airports, including New York and Washington, D.C., in exchange for permission to merge and create the world's largest airline.

The agreement announced on Tuesday settles a government lawsuit filed in August that argued that US Airways and AMR Corp, parent of bankrupt American Airlines, should be forced to scrap the merger because it would hinder competition and lead to higher fares.

Shares of AMR soared more than 25 percent on the compromise. The merger is central to American's effort to emerge from a two-year bankruptcy process.

The two airlines will divest some of their takeoff and landing slots at Reagan National Airport, just outside Washington, D.C., and at New York's LaGuardia Airport, both busy airports with limited capacity.

At Reagan, the airlines will shed 52 pairs of takeoff and landing slots of nearly 300 total held by the two carriers, a move that affects 44 daily departures, said AMR spokesman Casey Norton said.

The carriers agreed to divest 17 pairs of takeoff and landing slots at LaGuardia, including five that are already being sub-leased to Southwest Airlines and its AirTran unit.

Competing low-cost carriers will also be given more access to airports in Boston, Chicago, Dallas, Los Angeles and Miami, the government said.

Department of Justice officials termed the settlement a boost to the competitive landscape of the U.S. airline industry, although the impact will cover only about 112 flights out of about 6,700 daily flights for US Airways and American.   Continued...

A U.S. Airways jet departs Washington's Reagan National Airport next to American Airlines jets outside Washington, in this February 25, 2013 file photo. REUTERS/Larry Downing/Files