Bankruptcy judge approves airline merger

A bankruptcy judge has approved the proposed merger between US Airways and American Airways, clearing the way for the two companies to create the world’s largest airline.

The airlines' deal with the Department of Justice was approved by U.S. Bankruptcy Judge Sean Lane on Wednesday morning. The companies said that, with the bankruptcy court's OK, their merger would now be closed on Dec. 9.

The court had been reviewing American’s bankruptcy proceedings before it announced its plans to merge with US Airways in February.


The companies said at the time that their merger would satisfy American’s creditors and create a new airline that would be worth $11 billion. The airlines have since said the value of their combined companies would top $17 billion.

The merger ran into opposition over the summer from the Justice Department, which sued in August to block the proposed combination because it argued the combination would violate federal anti-trust laws.

The Justice Department argued that the airlines had flight schedules that contained too many similar destinations. US Airways and American countered that less than 10 of their normal non-stop routes were identical, but Justice argued that flights with layovers should also be counted.

US Air and American said they needed to become one airline to be able to compete with other airlines that have been allowed to combine forces in recent years, citing recent mergers between Delta and Northwest, United and Continental and Southwest and AirTran Airways.

The airlines and the Justice Department reached a deal earlier this month to end the lawsuit. The deal required the airlines to give up some of their current flights at Washington, D.C.'s Ronald Reagan National Airport and New York’s LaGuardia Airport.

The settlement agreement also called for US Airways and American to maintain their current hub airports for a period of at least three years.

The US Airways-American merger continues a trend of airline consolidation that has shaken up the U.S. aviation industry in recent years.

Consumer groups have worried that the reduction in the number of U.S. airlines would result in higher prices for passengers because there would be less competition for flights. 

-This story was originally posted at 10:40 a.m., and it was updated with new information at 12:44 p.m.