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September 2022, Virtual
September 29 2022, Virtual
American Airlines has hit back at a legal objection to its merger with US Airways filed this week.
The US Justice Department has lodged a lawsuit claiming the merger would restrict competition, only days before it was due to be approved. The two airlines said they would mount “a vigorous and strong defence” and claimed the deal would actually promote competition.
“Blocking this pro-competitive merger will deny customers access to a broader airline network that gives them more choices,” the airline said in a statement. It added that the result for consumers “is that the new American will be a highly competitive alternative to other domestic and global carriers”.
The DOJ’s intervention came as a surprise to the industry, as it had previously approved the mega mergers of Delta and Northwest and United and Continental. This time however, it is concerned about the dominance that American Airlines would have in the market if it picks up US Airways’ hubs at Charlotte, Philadelphia and to a lesser extent, Phoenix.
There is also concern about additional slots at JFK that the deal would bring and the two carriers’ dominance at Washington Reagan airport, which accounts for 20 million passengers and where the combined airline would control 69 per cent of slots.
American Airlines had planned to use the merger to mark its exit from bankruptcy protection under the US Chapter 11 laws, which allows it to reorganise and seek funding while protected from creditors. The merger plans were approved by the European Union earlier this month.