DOJ Putting A Price On US Airways’ Marriage To American

The planned nuptials of US Airways and American Airlines have been on hold for months as the Justice Dept. tried to figure out whether it really wanted to keep the lovebirds apart — like it did with T-Mobile and AT&T — or if it just wanted them to have a slightly less pleasant honeymoon. Now it looks like the DOJ has finally gotten around to determining just what this wedding will cost the two carriers.

Not surprisingly, the DOJ is telling the airlines that if they want to combine their stuff and create the world’s largest single airline, they’ll have to divest themselves of some of what each party brings to the marriage.

That mainly means takeoff and landing slots at various airports around the country. Though the DOJ isn’t saying exactly which airports are part of the current negotiations, it’s a certainty that Reagan National Airport outside of D.C. is key. US Airways already controls 55% of the slots at Reagan. Combined, the two airlines would take up more than two-thirds of the slots at the airport.

The DOJ lawsuit aimed at blocking the merger claimed that the joined airline would result in a lack of competition on more than 1,000 routes, so expect the list of divestitures to cover airports all over the U.S. There may even be divestitures of some international slots in order to make the merger happen.

U.S. Attorney General Eric Holder said today that he’s hoping the negotiations will be completed before the scheduled Nov. 25 start of the trial over this merger, but that if the talks fail, “we are fully prepared to take this case to trial… We will not agree to something that does not fundamentally resolve the concerns that were expressed in the complaint.”

Justice Dept. hopes to settle American, US Airways fight [Reuters]
U.S. Wants Broad Divestitures From AMR, US Airways [WSJ]

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  1. CommonC3nts says:

    It sounds like it would just be easier to not let the companies merge.
    Consumers will get no benefit form the merger.