November 28, 2013 in Business

American Airlines, US Airways merger to proceed

Federal judge rules against antitrust lawsuit
David Koenig Associated Press
 
Company details

The new company will be called American Airlines Group Inc. and be based in Fort Worth, Texas.

A federal bankruptcy judge has cleared the way for American Airlines and US Airways to complete their merger and create the world’s largest airline.

The judge ruled Wednesday that this month’s settlement of an antitrust lawsuit filed by the federal government didn’t upset American’s bankruptcy-reorganization plan, which is built around the merger. He rejected a request by a group of consumers to block the deal temporarily.

American said immediately after the ruling that it plans to complete the deal on Dec. 9.

The Justice Department had sued to block the merger in August, saying that it would hurt competition and lead to higher prices. But regulators settled their case in exchange for the airlines’ promise to surrender some coveted landing rights at Reagan National near Washington and LaGuardia in New York and a few gates at five other airports.

The new American Airlines will be slightly larger in revenue and passenger traffic than United Airlines, and four airlines – American, United, Delta and Southwest – will control more than 80 percent of the U.S. market. Since 2005, mergers will have cut the industry from nine big airlines to just those four.

U.S. District Court Judge Sean Lane in New York had approved the merge-and-emerge-from-bankruptcy plan of American parent AMR Corp. back in September, but said it was conditioned on the company winning or settling the lawsuit filed by the government.

AMR filed for bankruptcy protection in November 2011 after losing billions of dollars in the previous decade. Almost immediately, US Airways began pursuing a merger. AMR management was initially reluctant, but the two sides announced a deal in February 2013. The new company will be called American Airlines Group Inc. and be based in Fort Worth, Texas.

A separate federal court will oversee a 60-day period in which the public can comment on the government’s settlement with AMR and US Airways Group Inc., but that won’t stop the merger.

Shares of US Airways rose 17 cents to close at $23.98, and AMR shares, which are traded only over the counter, gained 28 cents, or 2.3 percent, to $12.25 – they were worth $1.62 the day before the company filed for bankruptcy.

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