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US, states try to block merger of 2 airlines
Photo
A US Airways plane, foreground, and an American Airlines plane are seen parked at the terminal at Washington’s Ronald Reagan National Airport on Tuesday. The Justice Department and a number of U.S. state attorneys general Tuesday challenged a proposed $11 billion merger between US Airways Group Inc. and American Airlines’ parent company, AMR Corp.
Associated Press
WASHINGTON
The federal government is trying to block the proposed merger of American Airlines and US Airways, saying it would cause “substantial harm” to consumers by leading to higher fares and fees.
The U.S. Justice Department, joined by the attorneys general of six states and the District of Columbia, filed a lawsuit to block the merger Tuesday in federal court in Washington, D.C.
The airlines said the government’s conclusions were wrong, and they vowed to use “all legal options” to fight back.
The government’s action threatens to quash a deal that would create the world’s largest airline by passenger miles. The airlines could challenge the government in court, or possibly agree to concessions that would persuade regulators to approve the merger.
The lawsuit caught many observers by surprise. In the past five years, antitrust regulators had allowed three other major airline mergers to go ahead, leaving five airlines in control of about 80 percent of the domestic market. But the government argued that this merger would hurt consumers around the country by eliminating a competitor on more than 1,000 routes. Mergers have helped the industry limit seats, push fares higher and return to profitability.
Last year, business and leisure travelers spent more than $70 billion on airfare in the United States. Consumer advocates cheered the lawsuit.