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Federal government sues to block airline merger

August 14, 2013 • Business


FILE – In this Thursday, Feb. 14, 2013, file photo, a U.S. Airways jet passes an American Airlines jet at Sky Harbor International Airport in Phoenix. The merger of the two airlines has given birth to a mega airline with more passengers than any other in the world. The Justice Department and a number of state attorneys general on Tuesday, Aug. 13, 2013, challenged a proposed $11 billion merger between US Airways Group Inc. and American Airlines’ parent company, AMR Corp. (AP Photo/Matt York, file)

DALLAS (AP) — American Airlines and US Airways expected to spend this week cruising toward completion of a merger that would create the world’s biggest airline.

Instead, they were stunned Tuesday when the federal government and six states sued to block the deal, saying it would hurt competition and cost consumers hundreds of millions of dollars a year in higher fares and extra fees.

Antitrust regulators had done little to interfere with other big airline mergers in the past five years, including Delta-Northwest and United-Continental. So, they were not expected to stand in the way of American and US Airways. But this latest deal would leave four airlines controlling more than 80 percent of the U.S. air-travel market.

“By further reducing the number of legacy airlines and aligning the economic incentives of those that remain, the merger of US Airways and American would make it easier for the remaining airlines to cooperate, rather than compete, on price and service,” the lawsuit said.

The Justice Department turned the words of US Airways leaders against them. The 56-page complaint filed in federal district court in Washington, D.C., was peppered with quotes from internal emails, investor presentations and public comments in which top executives noted that previous mergers had helped lead to higher fares and higher fees to check a Login to read more

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