Govt in agreement to allow American merger

American Airlines and US Airways

Credit: WFAA

Govt in agreement to allow American merger

Print
Email
|

by Associated Press and WFAA

WFAA

Posted on November 12, 2013 at 12:15 PM

Updated Tuesday, Nov 12 at 2:29 PM

WASHINGTON — The Justice Department says it has reached an agreement to allow the merger of US Airways and American Airlines.

The agreement requires the airlines to scale back the size of the merger at key airports in Washington, New York, and other big cities, including giving up two gates at Dallas Love Field.

After operations are scaled back, the combined company expects to operate 44 fewer daily departures at Washington Reagan National Airport and 12 fewer daily departures at New York LaGuardia Airport than the approximately 290 daily DCA departures and 175 daily LGA departures that American and US Airways operate currently, according to an American Airlines press release.

The Department of Justice and experts News 8 spoke with both say low-cost carriers like Dallas-based Southwest Airlines will likely benefit from American and US Airways’ divestitures at airports like Love Field.

“We congratulate all the parties on a tentative settlement that preserves vigorous competition in the U.S. Airline industry. We look forward to working with DOJ on a fair and transparent process by which Southwest can expand our low fare competitive presence in DCA and LGA,” said Brad Hawkins with Southwest Airlines.

In August, the government sued to block the merger, saying it would restrict competition and drive up prices for consumers on hundreds of routes around the country.

Attorney General Eric Holder said the agreement would ensure more competition on nonstop and connecting routes throughout the country. The department called the slot and gate divestitures at key airports "groundbreaking."

The companies expect to complete the merger in December.

“This is an important day for our customers, our people and our financial stakeholders," said Tom Horton, chairman, president and CEO of AMR, and incoming chairman of the board of the combined company in a statement. "This agreement allows us to take the final steps in creating the new American Airlines. With a renewed spirit, we are about to create the world’s leading airline that will offer, along with our oneworld partners, a comprehensive global network and service by the best people in the business."

The Association of Professional Flight Attendants applauded the deal, saying it was the "culmination of well over a year of hard work."

“This is fantastic news not only for all the employees of the new American, but for consumers and the industry,” said APFA President Laura Glading. “I want to thank our flight attendants for stepping up and making the case for this merger. Clearly, our voices were heard at the Justice Department. There is strength in unity.”

Transport Workers Union of America Air Transport Director Garry Drummond welcomed the move as well, saying the Department of Justice's actions in recent weeks were "the equivalent of hitting a pause button on workers’ wages, benefits and job security."

"Today’s announcement will allow TWU members at American Airlines to gain long-delayed raises," Drummond said in a statement. "Negotiations for our members at US Airways have been in limbo as a result of the DoJ’s actions, those talks can now move forward.  We also can begin to move forward on working out final details related to combining the two airlines’ work groups."

"[W]e are thankful to our employees, who throughout this process continued to believe in a better future as one airline and who voiced their support passionately and consistently," said incoming CEO of the combined airline Doug Parker.

The airlines had said their deal would increase competition by creating another big competitor to United Airlines and Delta Air Lines, which grew through recent mergers.

Six states had joined the lawsuit to block the merger, fearing the loss of flights and jobs at their airports. The Justice Department said that American and US Airways agreed to maintain for three years the US Airways hubs in Charlotte, Philadelphia and Phoenix and American hubs at Miami, Chicago's O'Hare Airport, New York's John F. Kennedy International Airport and Los Angeles International.

When it sued in August, the Justice Department was joined by Texas, where American is based, and Arizona, home to US Airways. They said the deal would hurt consumers in their states.

But six weeks later, Texas Attorney General Greg Abbott, a Republican who is running for governor next year, had a change of heart and pulled out of the lawsuit. Then the attorney general of Florida met with American CEO Tom Horton and expressed hope for a settlement, adding to the sense of crumbling opposition to the merger. Dozens of Democratic members of Congress implored the Obama administration to drop the lawsuit.

Abbott said in a statement his office's "early involvement in this case provided Texas a critical seat at the table and resulted in a settlement agreement that preserved competition, ensured daily flight service to communities across the state and protected Texas jobs."

"The agreement secured today expands the requirement that American maintain daily flight service to Texas communities from three years to five years – and adds the Texarkana Airport to the daily service commitment list," said a statement from the Texas Attorney General's Office.

Last week, Holder confirmed that settlement talks were underway and added that he hoped a trial could be avoided. He seemed to set wide parameters on a possible compromise.

The tone of Holder's comments was much softer than the tough, line-in-the-sand language used in August by William Baer, the assistant attorney general for antitrust issues, who had said that stopping the merger was the only proper outcome.

WFAA's Jason Whitely and Associated Press reporters David Koenig and Pete Yost contributed to this report.

Print
Email
|