The Department of Justice, six state attorneys general, and the District of Columbia filed a civil antitrust lawsuit on Tuesday challenging the proposed $11 billion merger between US Airways Group Inc. and American Airlines’ parent corporation, AMR Corp. The department said that the merger, which would result in the creation of the world’s largest airline, 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.
The Department of Justice’s Antitrust Division, along with the attorneys general, filed a lawsuit in the U.S. District Court for the District of Columbia, which seeks to prevent the companies from merging and to preserve the existing head-to-head competition between the firms that the transaction would eliminate. The participating attorneys general are: Texas, where American Airlines is headquartered; Arizona, where US Airways is headquartered; Florida; the District of Columbia; Pennsylvania; Tennessee; and Virginia.
In remarks released ahead of a conference call regarding the lawsuit, Assistant Attorney General Bill Baer asserted that neither airline needs this merger to succeed. “We simply cannot approve a merger that would result in U.S. consumers paying higher fares, higher fees and receiving less service.”
In the last five years, antitrust regulators had allowed Delta Air Lines to buy Northwest, United Airlines to combine with Continental, and Southwest Airlines to buy AirTran. The nation had gone from nine major carriers in 2005 to five, and the Justice Department hadn’t opposed an airline merger since United’s 2001 attempt to buy US Airways, a deal that was later abandoned.
US Airways CEO Doug Parker, who would lead the combined airline, vowed to fight the lawsuit in a letter Tuesday to airline workers.
"We are extremely disappointed in this action and believe the DOJ is wrong in its assessment," Parker said. "We will fight them."
Though Baer said he was open to discussion aimed at resolving the lawsuit, a senior airline official told a reporter that American would not enter into talks.
The official said that the lawsuit could be litigated quickly and that the merger, which had been planned in the third quarter, still could be achieved by year’s end.
The U.S. decision to sue follows the Aug. 5 approval of the merger by European Union antitrust authorities after the companies agreed to give up the right to a daily roundtrip between London’s Heathrow Airport, the EU’s busiest hub, and Philadelphia.