The 11 billion dollar merger, which would create the world‘s biggest airline, was supported by a federal judge in March and has been backed by the European Union. The grievance says customers would see a price increase as the deal would “substantially lessen competition” in the US market.
US Airways CEO Doug Parker said the firm would fight the injunction. “We are extremely disappointed in this action and believe the Department of Justice is wrong in its assessment,” Mr Parker said in a letter to employees. The District of Columbia and six US states are cooperating in the legal action: Texas, where American Airlines is headquartered, Arizona, where US Airways is based, Florida, Pennsylvania, Tennessee and Virginia.
American Airlines and US Airways said in regards to the justice department’s action they do not expect the merger to finish by the end of 2013, but that they are staying “hopeful” the suit would be finish by the end of the year. Stocks prices in both companies fell, along with the stock prices of other airlines, as information of the antitrust case hit the public on Tuesday.
“By challenging this merger, the Department of Justice is saying that the American people deserve better,” US Attorney General Eric Holder said in a statement. “This transaction would result in consumers paying the price - in higher air fares, higher fees and fewer choices.” The lawsuit also indicates direct competition between the airlines on nonstop routes worth about 2 billion dollars in annual income.
In one example, the suit says the newly combined company would take up 69% of flights out of Washington‘s Reagan National Airport and 63% of nonstop routes out of the airport. The airlines had previously accepted take-off and landing slots at airports in Philadelphia and London in order to win EU endorsement last week. When the merger was publicized in February, US Senate Commerce Committee chairman Jay Rockefeller also stated concern that customers would lose. American Airlines has been in bankruptcy protection since November 2011, but US Airways has been making money in recent years.
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US Airways CEO Doug Parker said the firm would fight the injunction. “We are extremely disappointed in this action and believe the Department of Justice is wrong in its assessment,” Mr Parker said in a letter to employees. The District of Columbia and six US states are cooperating in the legal action: Texas, where American Airlines is headquartered, Arizona, where US Airways is based, Florida, Pennsylvania, Tennessee and Virginia.
American Airlines and US Airways said in regards to the justice department’s action they do not expect the merger to finish by the end of 2013, but that they are staying “hopeful” the suit would be finish by the end of the year. Stocks prices in both companies fell, along with the stock prices of other airlines, as information of the antitrust case hit the public on Tuesday.
“By challenging this merger, the Department of Justice is saying that the American people deserve better,” US Attorney General Eric Holder said in a statement. “This transaction would result in consumers paying the price - in higher air fares, higher fees and fewer choices.” The lawsuit also indicates direct competition between the airlines on nonstop routes worth about 2 billion dollars in annual income.
In one example, the suit says the newly combined company would take up 69% of flights out of Washington‘s Reagan National Airport and 63% of nonstop routes out of the airport. The airlines had previously accepted take-off and landing slots at airports in Philadelphia and London in order to win EU endorsement last week. When the merger was publicized in February, US Senate Commerce Committee chairman Jay Rockefeller also stated concern that customers would lose. American Airlines has been in bankruptcy protection since November 2011, but US Airways has been making money in recent years.
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