December 6, 2013 / 8:32 PM / in 5 years

Judge rejects consumers' bid to block American-US Airways merger

NEW YORK (Reuters) - A federal judge on Friday rejected a last-ditch effort by consumers and travel agents to stop American Airlines and US Airways from merging next week, a move they fear would drive prices up and service down and make planes more crowded.

An American Airlines jet takes off while U.S. Airways jets are lined up at Reagan National Airport on the day U.S. Airways' stockholders are expected to vote on whether to approve the $11 billion merger of the two airlines effectively creating the world's largest carrier, in Washington July 12, 2013. REUTERS/Larry Downing

The combination of American’s parent AMR Corp AAMRQ.PK and US Airways Group Inc LCC.N would create the world’s largest carrier and would follow last month’s resolution of antitrust objections by the U.S. Department of Justice.

That settlement requires the airlines to shed some landing slots and gates at several airports, including in New York and Washington, D.C., and had won approval on November 27 from U.S. Bankruptcy Judge Sean Lane, who oversees AMR’s Chapter 11 case.

AMR has said it hoped to complete the merger on December 9.

In their appeal in the U.S. District Court in Manhattan, plaintiffs led by California resident Carolyn Fjord urged that Lane’s order be put on hold, saying they would face irreparable harm if the “anticompetitive” merger went forward.

According to a Wednesday court filing, the consumers and travel agents said combining the carriers could result in fewer flights and available seats, higher fares, poorer service and lower competition, and would be hard to undo once completed.

At a Friday hearing, Chief Judge Loretta Preska of the U.S. District Court in Manhattan said the plaintiffs had failed to show irreparable harm.

“I adopt Judge Lane’s rendition of the law in all respects,” she said.

Joseph Alioto, a lawyer for the consumers and travel agents, indicated at the hearing he would seek an appeal. But Preska denied Alioto’s request to suspend the effect of her ruling pending an appeal.

The case is Fjord v. AMR Corp et al, U.S. Bankruptcy Court, Southern District of New York, No. 13-ap-01392. The main bankruptcy case is In re: AMR Corp et al in the same court, No. 11-15463.

Reporting by Nate Raymond and Jonathan Stempel in New York; Editing by Gary Hill and Krista Hughes

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