Settlement reached in US Airways-American antitrust case

Settlement reached in US Airways-American antitrust case

November 12th, 2013 by Associated Press in Local - Breaking News

This Tuesday, Aug. 13, 2013 file photo shows an American Airlines plane and a US Airways plane at parked at Washington's Ronald Reagan National Airport. On Tuesday, Nov. 12, 2013, the Justice Department says it has reached an agreement to allow the merger of the two airlines. The agreement requires them to scale back the size of the merger at key airports in Washington and other big cities. (AP Photo/Susan Walsh)

Photo by Associated Press/Times Free Press.

FORT WORTH, Texas - American Airlines and US Airways have reached a settlement with the U.S. Department of Justice in its antitrust case, both sides announced Tuesday.

The deal, which will allow the merger between American and US Airways to go forward, includes the airlines divesting 52 take-off and landing slot pairs at Washington Reagan National Airport and 17 slot pairs at New York's LaGuardia Airport. The carriers are also giving up rights and interests to two airport gates each at Boston, Chicago O'Hare, Dallas Love Field, Los Angeles and Miami.

"This agreement allows us to take the final steps in creating the new American Airlines," American Chief Executive Tom Horton said in a statement. With the deal, the airlines should complete their merger in December and American will emerge from bankruptcy about two years after it first filed for bankruptcy protection.

U.S. Attorney General Eric Holder said the deal has the potential to "shift the landscape of the airline industry."

"By guaranteeing a bigger foothold for low-cost carriers at key U.S. airports, this settlement ensures airline passengers will see more competition on nonstop and connecting routes throughout the country," Holder said.

American and US Airways also agreed to maintain its hubs in Charlotte, N.C.; New York's John F. Kennedy International Airport; Los Angeles; Miami; Chicago O'Hare; Philadelphia; and Phoenix for a period of three years in order to settle the antitrust concerns of state attorney generals who had joined the Justice Department's lawsuit. Texas Attorney General Greg Abbott pulled out of the lawsuit last month after the carriers agreed to keep its headquarters in North Texas and maintain service at a dozen Texas airports over the next three years.

Of the slots that the airlines are releasing at Reagan, eight slot pairs are already leased and used by JetBlue Airways. Of the 17 slots at LaGuardia, five of those are currently leased and used by Southwest Airlines. Both JetBlue and Southwest had lobbied for slot divestitures as part of any settlement deal as they both want to expand their service at those slot-constricted airports.

A trial had been scheduled for Nov. 25 in federal court in Washington, D.C. The settlement deal will need to be approved by the judge, both sides said.

"We are pleased to have this lawsuit behind us and look forward to building the new American Airlines together," said US Airways Chief Executive Doug Parker, who will become the new CEO of the combined carrier.

The unions that represent pilots, flight attendants, mechanics and ground workers cheered the settlement.

"This is fantastic news, not only for all the employees of the new American, but for consumers and the industry," Association of Professional Flight Attendants President Laura Glading said in a statement.

The Allied Pilots Association said the settlement provides job security for its pilots and their families.

"We are pleased that the Justice Department, American and USAir have reached agreement on creating a viable competitor to Delta and United," said APA spokesman Dennis Tajer.

The Transport Workers Union, which represents workers at both airlines, said the deal will allow the union to work out final details of merging its work groups at the airlines.

"Today's announcement will allow TWU members at American Airlines to gain long-delayed raises. Negotiations for our members at US Airways have been in limbo as a result of the DOJ's actions; those talks can now move forward," said TWU air transport director Garry Drummond.