Tuesday, November 12, 2013

AA-USAir Merger Approved by US Department of Justice

The New York Times reports that
The Justice Department has reached a preliminary agreement to settle its fight with American Airlines and US Airways over their proposed merger, according to a court document filed on Tuesday. Under the proposal, American and US Airways would sell 104 takeoff and landing slots at Ronald Reagan National Airport in Washington, 34 slots at La Guardia Airport in New York, and various assets at five other airports, including O’Hare Airport in Chicago, Los Angeles International Airport and Boston Logan International Airport. The settlement still needs to be approved by the Federal District Court in the District of Columbia as well as a judge overseeing American Airlines’ bankruptcy proceeding. The airlines are confident they can now close their merger deal by mid-December
The implications of the merger are very significant here in Miami from an economic perspective. American is a major employer in the region and has a robust network of flights to and from Latin and South American and Europe. Because American Airlines already operates as a hub with few flights overlying USAir's route system (USAir typically served specific markets with a few flights a day to Charlotte, Philadelphia), it is not clear that domestic operations will be impacted to any remarkable measure. 

Not the case in other cities, particularly Washington, D.C. and New York (LaGuardia). As part of a stipulated agreement with the federal government, the merged airline will have to divest of particular "slots" to "low cost carriers" such as JetBlue to ensure the promise (or what is left of the promise) of a contestable deregulated airline marketplace. 

A copy of the proposed consent order appears here: