American-US Airways settlement gets bankruptcy approval

The merger of American Airlines and US Airways has been cleared for takeoff by U.S. Department of Justice antitrust officials.
The merger of American Airlines and US Airways has been cleared for takeoff by U.S. Department of Justice antitrust officials. (File)
Posted: November 29, 2013

A federal bankruptcy judge on Wednesday approved the settlement reached between the Justice Department and American Airlines and US Airways Group, clearing the way for the airlines to close their planned merger Dec. 9 and create the world's largest airline.

US Airways and American announced after the ruling that the combined airline, to be named American Airlines Group Inc., would begin trading on the Nasdaq stock market under the ticker symbol "AAL" on Dec. 9. The last day for the airlines' stock to trade separately will be Dec. 6.

Bankruptcy Judge Sean H. Lane in New York City ruled that the settlement with the Justice Department, in which American and US Airways agreed to give up dozens of takeoff and landing slots to competitors, was "fair and equitable."

Lane denied a request for a temporary restraining order by a San Francisco attorney seeking to block the merger, saying the lawsuit "utterly failed to establish irreparable harm."

"The court has no evidence whatsoever regarding who the plaintiffs are, what the nature of their interest in the airline industry is, or how they would be individually harmed" by the merger, he said.

To delay the merger "would cause significant economic harm" to American's creditors and shareholders, including an effect on stock prices "equating to a $400 million decline in shareholder value," the judge said.

He ruled that the merger could close "without delay."

US Airways is Philadelphia's dominant airline, transporting 73 percent of air travelers here. Executives of the new American, based in Fort Worth, Texas, have pledged to maintain all American and US Airways hubs, including Philadelphia.

On Monday, Lane heard arguments from San Francisco attorney Joseph M. Alioto, representing a group of 40 consumers who contended the merger would reduce competition and hike fares.

The claims were similar to those raised by the Justice Department, which settled its lawsuit Nov. 12 after the airlines agreed to give up some operating rights at major airports to low-fare competitors.

"One must assume that the anticompetitive concerns of the federal government have been satisfactorily addressed," said Lane, who confirmed American's reorganization plan in September, including the merger, conditional on Justice Department approval.

The federal government sued in August, maintaining the combined carrier would have had a monopoly on too many flights at certain airports, in particular Washington Reagan National Airport, where the new American would control 68 percent of the slots, which are takeoff and landing rights.

Under the antitrust settlement, the airlines agreed to give up 52 slot pairs at Reagan National, 17 slot pairs at New York's LaGuardia Airport, and two gates each and associated facilities at Boston Logan, Chicago O'Hare, Dallas Love Field, and Los Angeles, and Miami International Airports.

U.S. District Judge Colleen Kollar-Kotelly in Washington, who was overseeing the government antitrust case, set out a timetable through March 10, 2014, for making public the terms of the Justice Department settlement.


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