AMR Corporation, the parent company of American Airlines, and US Airways now expect to successfully complete their proposed merger after reaching a preliminary settlement with the US Justice Department and several states that originally challenged the deal. Announced back in February, the merger's fate came into doubt in August, when the US Department of Justice (along with attorneys general from Arizona, Florida, Pennsylvania, Tennessee, Texas, Virginia and the District of Columbia) sued to prevent the companies from combining.
The DOJ argued that a merger would raise ticket prices
Officials aggressively argued that the merger would ultimately result in less competition and higher prices for the traveling public. In its complaint, the DOJ claimed that one-stop flights from US Airways have ultimately forced bigger competitors to lower the cost of direct flights. A successful merger would therefore instantly eliminate this healthy competition, raising prices for everyone. But in recent weeks (and with the planned trial kickoff fast approaching), American Airlines and US Airways have ramped up the pressure, organizing demonstrations supporting the merger at the US Capitol.
The DOJ was also concerned about the fact that nearly 70 percent of takeoff and landing slots at Reagan National Airport would be controlled by the massive airline. At least in this area, there have been significant concessions to reach today's preliminary settlement. American Airlines and US Airways will sell off 104 slots at Reagan National Airport in Washington and 34 slots at New York's La Guardia Airport. The new American Airlines will also need to give up control of two gates "and related support facilities" at Boston Logan International Airport, Chicago O'Hare International Airport, Dallas Love Field, Los Angeles International Airport, and Miami International Airport. If given final approval on the settlement, the merger is expected to be finalized in December.