Airlines hope to close merger in December

The CEO of American Airlines said on Tuesday that his company's merger with US Airways could be closed "in the first half of December" now that the Department of Justice has dropped its lawsuit to block the combination.

Speaking on a conference call with reporters after a settlement between the airlines and the Justice Department was announced, American CEO Tom Horton said the airlines expected to be able to move forward quickly with their plans to merge.

"The next major milestone is a hearing before the bankruptcy judge on Nov. 25, which was scheduled today," Horton said. "If all goes well, we would expect to be able to close the merger in the first half of December."

ADVERTISEMENT
American was in the midst of bankruptcy proceedings before it announced its plans to merge with US Airways in February. The merger was valued at the time of the announcement at $11 billion, but US Airways CEO Doug Parker said Wednesday that the two companies were now worth $17 billion.

The deal with the Justice Department to clear the way for the merger hinged on flights to Washington, D.C.'s Reagan Washington National Airport, which is popular with members of Congress and their staffers because of its close proximity to Capitol Hill.

The Justice Department is requiring US Airways and American to give up 52 of their current flights at Reagan Airport, along with 17 at New York's LaGuardia Airport.

Unlike other airports across the country, airlines have to bid for the right to operate flights to Reagan and LaGuardia airports in a process that is known as "slots."

The landing rights at the two popular airports are regulated by the Federal Aviation Administration in a bid to maintain service between New York and Washington and popular destinations without limiting overall flight traffic.

US Air's Parker said the combined company may have to move flights that are currently offered from Reagan to other airports.

"There may be cities that no longer have service from DC, but there won't be any cities that have service today that won't have service from the new American," he said.

Parker said flights that are moved from Reagan Airport would likely be operated from Charlotte, N.C., or Philadelphia, Pa.

The Justice Department's agreement with the airlines requires them to continue operating hubs in both cities, as well as Dallas, Phoenix, Miami, Chicago and New York's John F. Kennedy airport, for at least three years.

Officials with the airline predicted that passengers could begin seeing signs of their combination, like overlapping frequent flier benefits, by as early as Jan. 7.