US Government & Six States Look to Block AA-US Merger

In a statement the Justice Department said the proposed combination “would substantially lessen competition for commercial air travel in local markets throughout the United States and result in passengers paying higher airfares and receiving less service.” As per Bloomberg, the six states joining the suit are Texas, Arizona, Florida, Pennsylvania, Tennessee and Virginia as well as DC.

The department, in a lawsuit filed in federal court in Washington, said the proposed tie-up violates U.S. antitrust law and would lead to less competition in the industry and higher prices for consumers. The Justice Department sued to block the transaction because it would remove the incentive for US Airways to offer lower prices and lead to higher airfares for consumers, said a person familiar with the matter who asked not to be identified because the matter is private.

Full details here

Update – Check out the live blog from MarketWatch here with the Justice Department’s comments during a post-announcement conference call.

Update 2 – Doug Parker’s response:

“We are extremely disappointed in this action and believe the DOJ is wrong in its assessment. We will fight them. I am certain that our proposed merger is the best path forward for both airlines and all of our stakeholders.”

..and joint press release:

Blocking this procompetitive merger will deny customers access to a broader airline network that gives them more choices. Further, this merger provides the best outcome for AMR’s restructuring. The widespread support from the employees and financial stakeholders of both airlines underscores the fact that this is the best path forward for both airlines and the customers and communities we serve. We will mount a vigorous defense and pursue all legal options in order to achieve this merger and deliver the benefits of the new American to our customers and communities as soon as possible.

Comments

  1. Texas – DFW, AA hub
    Arizona – PHX, US hub
    Florida – MIA, AA hub
    Pennsylvania – PHL, US hub
    Virginia – DCA, US focus airport
    Tennessee

    States joining suit represent half of the combined AA and US hubs and the US focus city, plus Tennessee.

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