DOJ Set To Clear American Airlines/US Airways Merger
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MIAMI (CBSMiami) – Airline travelers are about to have even fewer choices after the U.S. Department of Justice and American Airlines/US Airways reached a settlement to allow the merger of the two companies to go forward, according to the Associated Press.
American, which has a hub at Miami International Airport, will combine with US Airways in the $11 billion merger to create the largest airline in the world.
With American’s merger with US Airways going forward, American, United, Delta, and Southwest will control roughly three-quarters of U.S. airline traffic.
The Justice Department lawsuit to block the merger, filed August 13, was joined by six states and the District of Columbia. The planned merger was announced in February of this year.
The DOJ said the combination of the companies would reduce competition for commercial air travel in several markets and would likely result in higher airfares for less service.
As originally proposed, the carrier was to keep the American Airlines name, but would be run by US Airways CEO Doug Parker. American’s CEO, Tom Horton, will serve as chairman of the new company until mid-2014.
The original deal gave the new American more than 900 planes, 3,200 daily flights and about 95,000 employees, not counting regional affiliates.
Just five years ago, American was the world’s biggest airline. It boasted a history reaching back 80 years to the beginning of air travel. It had popularized the frequent-flier program and developed the modern system of pricing airline tickets to match demand.
American ranked 14th out of 15 airlines in government rankings for on-time performance in 2012 (US Airways was fifth). Only United had a higher rate of complaints (but US Airways was barely better than American).
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