Department of Justice files suit to block deal to create nation's largest airline

The Department of Justice (DOJ) on Tuesday sought to block a proposed merger between US Airways and American Airlines that would create the country’s largest airline. [WATCH VIDEO]

Justice filed suit to block the merger — which would combine the nation's fourth- and fifth-largest carriers — because it said it would violate federal antitrust laws.

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Attorney General Eric Holder said the combination would eliminate too much competition in the industry and raise airline ticket prices for consumers.

“By challenging this merger, the Department of Justice is saying that the American people deserve better," Attorney General Eric Holder said in a statement.



 “This transaction would result in consumers paying the price – in higher airfares, higher fees and fewer choices. Today’s action proves our determination to fight for the best interests of consumers by ensuring robust competition in the marketplace.”

The airlines vowed to fight the DOJ’s attempt to block its $11 billion merger, which was announced in February of this year.

“We will mount a vigorous defense and pursue all legal options in order to achieve this merger and deliver the benefits of the new American to our customers and communities as soon as possible," the companies said in a joint statement.

“We believe that the DOJ is wrong in its assessment of our merger. Integrating the complementary networks of American and US Airways to benefit passengers is the motivation for bringing these airlines together,” the airlines’ statement continued.

The two companies said Justice would hurt consumers by denying the merger.

“Blocking this pro-competitive merger will deny customers access to a broader airline network that gives them more choices,” the airlines said.

American and U.S. Airways announced their plans to merge while the former was in the middle of bankruptcy proceedings. American initially resisted US Airways attempts to merge, but the company relented after undergoing bankruptcy proceedings for more than a year.

The airlines argued at the time of their announcement that combining forces would allow American to pay off its remaining debts more quickly because it would allow the companies to compete with other airlines that have merged in recent years.

The proposed US Airways-American merger follows previous combinations by Delta and Northwest Airlines, United and Continental Airlines and Southwest and AirTran Airways, all since 2008.

All of the previous major airline mergers since 2008 were cleared by Justice, but it argues that US Air and American have too much overlap in their current routes, which would result in an elimination of competition at several airports.

The DOJ said its lawsuit is being filled with the attorneys general of six states, including Texas, where American Airlines is currently based, and Arizona, where US Airways is headquartered.

Lawmakers have criticized the proposed combination in hearings this year because of concerns about losing flights to airports in their districts. Lawmakers who represent districts were airlines removed hubs in previous mergers were particular sensitive to the possibility of reducing service.

This story was posted at 10:53 a.m. and updated at 1:52 p.m.


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