AA/US Win, Merger Approved. Interesting ?s Answered & Full Settlement Details

US Airways and AMR reached a settlement with the US government yesterday, allowing them to proceed with creating the New American, which will become the world’s largest airline by traffic once the merger closes. The airlines announced that they hope to close the transaction by this December. Concessions were made at Reagan National (DCA) and LaGuardia (LGA), but really the airlines walked away with their original plan pretty much intact (7% reduction at LGA and 15% reduction at DCA ). Besides the airport slot transfers, AA/US agreed to maintaining all of their current hubs for at least three years and to continue providing at least once daily service for the next five years to cities in the six states that were part of the Justice Department’s lawsuit.

Did AA/US win the fight? According to The Wall Street Journal, yes…

Many antitrust and airline industry experts deemed the settlement a victory for the carriers, because it left the vast majority of their merger plan intact. They added that the airlines likely would have given up some of the airport slots or gates now slated for divestiture anyway to consolidate operations after their merger. The settlement would affect just 112 of the new carrier’s planned 6,500 daily flights, the airlines said. The concessions are far more limited than what the Justice Department called for when it sued to block the merger in August, arguing that the deal would harm consumers by reducing air service and increasing fares.

They have a great graphic as well which shows just how little the share of departures and gates will change based on the settlement, even at LGA and DCA. Courtesy of WSJ:

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Some of my favorite coverage is from Bloomberg Businessweek which answers some great questions. I don’t have permission to re-print their full responses, so click on over to their site to read these in their entirety.

1. Does the settlement require big changes from American and US Airways in the merger? Not really. Both the government and the airlines are claiming victory, naturally, but it’s hard to see much the Justice Department lawyers managed to alter from the initial merger proposal. American and US Airways will need to

2. Why didn’t the government obtain more concessions? Why not just go to trial? A trial held big risks for both sides. And while antitrust attorneys said the government’s case had merit, it was also a lawsuit that

3. Why is the settlement so concentrated on service at Reagan National? US Airways was already the dominant carrier at that airport, which has severe limits

4. Is there a winner in this? Yes—the attorneys who will bill the new American Airlines for many, many hours of work.

Want to read the full settlement direct from the DoJ website? Check this link. More interestingly, check out pages 2-3 and 8-9 in the Competitive Impact statement located here.

Related – Building Up US Airways Miles for the AA Merger – Time to Take AAdvantage, Full List of Offers!

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