An American Airlines plane and a US Airways plane are parked at Washington's Ronald Reagan National Airport on Aug. 13.
WASHINGTON (USA TODAY) -- The Justice Department announced Tuesday it is settling
its lawsuit against the merger of American Airlines and US Airways by
requiring the combined airline to give up slots at key airports across
the country to low-cost competitors.
The department filed papers
in U.S. District Court in the District of Columbia to announce the
settlement that will avoid a trial scheduled to start Nov. 25.
settlement clears the way for American and US Airways to become the
world's largest airline, nearly two years after American filed its
bankruptcy case to reorganize.
The settlement will increase
presence of low-cost airlines in Boston, Chicago's O'Hare, Dallas Love
Field, Los Angeles, Miami, New York's LaGuardia and Washington's Reagan
"This agreement has the potential to shift the
landscape of the airline industry," Attorney General Eric Holder said.
"By guaranteeing a bigger foothold for low-cost carriers at key U.S.
airports, this settlement ensures airline passengers will see more
competition on non-
stop and connecting routes throughout the country."
See also: Airline stocks take off on news
is very good news and we are grateful to all who have made it happen,"
said Doug Parker, CEO of US Airways, and incoming CEO of the combined
airline, which will be based in Dallas/Fort Worth and go by American.
"We are pleased to have this lawsuit behind us and look forward to
building the new American Airlines together."
Under the terms of
the settlement, the airlines will divest 52 slot pairs at Reagan and 17
slot pairs at LaGuardia. The airlines will also surrender two gates each
at Boston's Logan airport, O'Hare, Dallas Love Field, Los Angeles and
Bill Baer, the assistant attorney general for the antitrust
division, told reporters Tuesday that the Justice Department was
confident in its case, but that the settlement would boost competition
by forcing the combined airline to give up slots at competitive
Baer cited Southwest's gain of slots at Newark,
following the United merger with Continental, and JetBlue's gain at
Reagan, for lowering airfares and boosting competition. Baer said the
number of slots the combined American will give up at seven airports
will be the most in merger history.
"It provides more competition
than exists today in this industry," Baer said. "That is good news for
consumers all across the country who will benefit from more choices and
more competitive airfares."
After completion of the required
divestitures, the combined company expects to operate 44 fewer daily
departures at Reagan and 12 fewer daily departures at LaGuardia than the
approximately 290 daily DCA departures and 175 daily LGA departures
that American and US Airways operate today.
Parker said the
combined airline must still decide which destinations to drop because of
the lost slots at Reagan and LaGuardia. But he said they would be
announced with enough time for the airlines that acquire the slots to
decide whether to continue serving those communities.
"We do indeed serve some communities that it is unlikely will be served by those that pick up these slots," Parker said.
Horton, CEO of American, said the loss of slots is relatively modest,
totaling about 15% of the combined airlines' slots at Reagan and 7% at
But the airlines said the changes wouldn't reduce total employment at the new company.
is an important day for our customers, our people and our financial
stakeholders," Horton said. "This agreement allows us to take the final
steps in creating the new American Airlines."
The companies now
expect to complete the merger in December. Completion of the merger
remains subject to the approval of the settlements by the U.S.
To maintain its service to small and medium-size
airports that US Airways warned might suffer from a reduction in slots
at Reagan and LaGuardia, the combined company announced plans to use its
gates at Reagan to serve those communities.
Another part of the
settlement also committed the combined American to maintain its hubs in
Charlotte, New York's JFK, Los Angeles, Miami, Chicago O'Hare,
Philadelphia and Phoenix. For a period of five years, the merged company
will continue daily service from those hubs to each of the states
participating in the lawsuit: Arizona, Florida, Pennsylvania, Michigan,
Tennessee and Virginia.
Delta Air Lines issued a statement
welcoming the agreement and saying the airline "looks forward to the
opportunity to acquire slots that will be divested under the agreement,
particularly at Washington-Reagan National Airport." Delta said it is
the airline best positioned to continue competitive non-stop flights
from Reagan to small and midsize cities that could otherwise see service
reduced or eliminated.