US Air (LCC) and American Airlines to Form World’s Largest Carrier
Shares of US Airways Group Inc. (LCC) closed up +0.25 or +1.07 percent to $23.52 per share on Tuesday, after news that the U.S. Justice Department had settled an anti-trust lawsuit against U.S. Airways Group Inc. and American Airlines (AAMRQ). The lawsuit was blocking the merger of the two companies, a deal worth approximately $17.2 billion.
The settlement is still subject to final approval by a federal judge. The settlement of the lawsuit is based on both airlines reducing their size, to which they have both agreed to. The lawsuit was filed by the District of Columbia and six stateâ s attorney generals on the grounds that the merger would affect consumers adversely by concentrating too much power to one carrier, both in airline routes and in the pricing of tickets.
Tempe, Arizona based U.S. Airways Group is the owner of U.S. Airways, a large domestic and international carrier with 198 destinations in North and South America, Europe and the Middle East. The company also owns Piedmont Airlines and PSA Airlines. The two airlines must make considerable concessions as a condition of the settlement. Both airlines have agreed to sell their ground facilities and gates at Chicago Oâ Hare, Dallas Love Field, LA and Miami International and Boston Logan airports. In addition, the two airlines have agreed to sell 104 slots at Washington D.C.s Reagan National airport and 34 slots at New Yorkâ s La Guardia airport. The D.C. slots will largely benefit JetBlue Airways (JBLU
), while the La Guardia slots will be offered to Southwest Airlines Co. (LUV
). The agreement to merge the two airlines began in February and was a key component to American Airlines resolving two years of bankruptcy proceedings. American Airlines stock soared +26 percent on Tuesday to close at $12 per share. The airlineâ s reorganization plan was already approved by a federal bankruptcy court judge but was contingent on winning the anti-trust lawsuit. A hearing for final consideration of the American Airlines restructuring will be heard by the judge presiding over the case on November 25th, which is the same day that was set for trial in the anti-trust case. The judge in the anti-trust case must also approve the restructuring. U.S. Attorney General Eric Holder stated that, â
Published on Nov 13, 2013
By Jay Hawk