Justice Department Sues to Block US Airways, American Merger

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U.S. Airways and American Airlines planes are shown at gates at DFW International Airport Thursday, Feb. 14, 2013, in Grapevine, Texas. The two airlines will merge forming the world's largest airlines.  (AP Photo/LM Otero)
AP, LM Otero

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The proposed $11 billion US Airways (LCC) merger with American Airlines was hit with a major roadblock on Tuesday when the U.S. filed a lawsuit to block the deal on antitrust grounds. Shares of US Airways fell more than 8.5% on the news.

The suit, which was filed by the Department of Justice, says the AMR-US Airways merger threatens "substantial harm" to consumers by reducing the number of major domestic airlines, and would lessen competition in local markets.

The lawsuit is supported by several states, including Arizona and Texas, a major hub and the headquarters of American Airlines, as well as Florida. Virginia and Pennsylvania.

U.S. regulators are concerned that a merger, if approved, would stifle competition, leading to higher fares and fees that would cost consumers "hundreds of millions of dollars" more than they already pay each year.

"Airline travel is vital to millions of American consumers who fly regularly for either business or pleasure," said Attorney General Eric Holder. "This transaction would result in consumers paying the price -- in higher airfares, higher fees and fewer choices."

Reducing the number of carriers and creating the world's largest airline would only help the remaining carriers, including Delta (DAL) and UnitedContinental (UAL), which would be the second and third largest U.S. carriers, respectively, if the deal went through, the government claims.
Neither U.S. Airways nor American immediately responded to FOX Business for a comment.

Follow Jennifer Booton on Twitter at @Jbooton

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11 Comments

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cpo1514

Based on this logic Eric Holder should be eliminating the Obama Doesnt Care single provider sham.

Eric... what Lib cause will you work for after you are fired from Govt service????

August 14 2013 at 10:24 AM Report abuse +2 rate up rate down Reply
rrarizona

The Obama lawyer fill employment act continues to ruin America. No surprise here.

August 13 2013 at 10:42 PM Report abuse +2 rate up rate down Reply
OSHP367

Sorry...too late! US Airways/AMERICAN could have merged earlier but after United/Continental and Airtran/Southwest merged the number of airlines was dwindling.....should have moved faster. But that is why they call them Useless Airways.....

August 13 2013 at 9:11 PM Report abuse -2 rate up rate down Reply
chicobombico

there is no competition so why bother. The justice department did not stop the other mergers, the damage is donew

August 13 2013 at 6:06 PM Report abuse -1 rate up rate down Reply
rlwdsi

Wow! Obama's step n fetchit is actually going to do something constructive! About time. Maybe it will be done "fast and furiously."

August 13 2013 at 6:06 PM Report abuse -3 rate up rate down Reply
1 reply to rlwdsi's comment
cpo1514

maybe Eric will eliminate the discriminatory health care act???

August 14 2013 at 10:26 AM Report abuse +1 rate up rate down Reply
mjchiara

From a consumer standpoint, I am very happy about this. Mergers, especially in the airline industry, create less competition, more monopolies, and higher prices for consumers. Tickets are so much more expensive now than a few years ago, and it is undoubtedly connected to recent airline mergers.

August 13 2013 at 3:09 PM Report abuse -1 rate up rate down Reply
mikelookup

Come on Mr. Holder this is not a black or white situation. Why the interest?

August 13 2013 at 2:50 PM Report abuse -3 rate up rate down Reply
2 replies to mikelookup's comment
walkupt

Soley because that is his job !

August 13 2013 at 3:21 PM Report abuse rate up rate down Reply
betty_brock

He wants us to think he's doing his job.

August 13 2013 at 6:14 PM Report abuse +1 rate up rate down Reply
mac2jr

U.S. Air and United tried to merge several years back and it almost worked, the problem was that each had different computer systems and software and it was near impossible to merge these systems (or so the story goes). Actually, I rode on both during this period and it was great until Denver when everything got screwed up due to the two airlines not coordinating flights, gates, terminals, etc. I got to my destination, but it was a trip..

August 13 2013 at 12:49 PM Report abuse +1 rate up rate down Reply
jalalhaidar

Good job, Justice. This merger is anti labor and anti consumer.

August 13 2013 at 12:08 PM Report abuse -1 rate up rate down Reply