Justice Department Sues To Block American-US Airways Merger
The US Justice Department on Tuesday sued to block the impending American Airlines-US Airways merger. Along with the DOJ, several states also sued to block the deal.
The airlines were expected to merge in the coming months to create the world’s largest airline. It would have competed against United and Delta airlines. However, the lawsuit will derail those plans.
The Justice Department filed the lawsuit in the US District Court for the District of Columbia, along with Arizona, Florida, Pennsylvania, Tennessee, Texas, and the District of Columbia.
USA Today reports that the main contention with the merger is the possible increase in the price of airline tickets, checked bags, and flight change fees. The lawsuit added that “millions of passengers benefit each year from head-to-head competition that this merger would eliminate.”
The two airlines sought a merger to be more competitive with other airline companies that had already merged. Those included Southwest and AirTran, United and Continental, and Delta and Northwest airlines.
NBC News notes that the merger would have allowed the four biggest US airlines to be products of mergers that first began in 2008. The deals have been able to help the industry control seats on planes, push fares higher for passengers, and also helped them return to profitability.
But Attorney General Eric Holder commented that the merger between US Airways and American Airlines would result in even higher fares, higher fees, and fewer choices for travelers to pick from.
The lawsuit to block the merger likely came as a surprise to the two airlines, considering the DOJ allowed other airlines to merge in the past. The companies have already cut costs and debt and pilots from both airlines have agreed on steps that will make it easier to combine them under one labor contract.
The US Airways-American Airlines merger would result in a company worth about $40 billion with 6,700 daily flights.
[Image by Lasse Fuss via Wikimedia Commons]
