States join US antitrust review of airline merger

[July 02, 2013]  DALLAS (AP) -- The attorney general of Texas and counterparts in other states joined a U.S. Department of Justice review of the proposed merger between American Airlines and US Airways.

Tom Kelley, a spokesman for Texas Attorney General Greg Abbott, said Monday that Texas is leading a group of 19 states that have entered the federal antitrust review. He declined further comment.

It's not unusual for states to join a federal merger review. By doing so, officials can look out for their state's interests and take part in meetings and depositions conducted by the Justice Department.

The states and the airlines signed a confidentiality agreement covering the review.

American Airlines and US Airways Group Inc. declined to comment.

The companies announced in February that they planned to merge in a deal that would create the biggest airline in the world.

Much of the scrutiny of the deal has focused on Reagan National Airport just outside Washington, D.C. Members of Congress have raised concern that if combined, American and US Airways would control about 70 percent of the takeoff and landing slots, but the airlines have fought any suggestion that they should be forced to sell some slots to boost competition.

US Airways CEO Doug Parker, who will lead the combined company if the merger is approved, told a Senate panel last week that if the combined airline loses slots at Reagan, it will cut flights between the capital and smaller cities.

The possibility of such reductions could be reason for some states to join the Justice Department's review. Other states, including Texas, may want to take part because they are home to hub airports and other large facilities operated by American and US Airways. Some of those hubs could be redundant if the merger is approved.

American and US Airways say that they overlap on only 12 of roughly 900 nonstop routes where they compete against each other. However, the Government Accountability Office also looked at one-stop routes and concluded last month that the merger would reduce competition on more than 1,600 routes, while increasing it on 210 routes.

The airlines have argued that the merger will be good for consumers by creating a stronger competitor to United Continental Holdings Inc. and Delta Air Lines Inc., which grew through recent mergers to become the world's two biggest carriers.

American and parent AMR Corp. filed for bankruptcy protection in November 2011. A federal judge is scheduled to consider approving AMR's plan of reorganization, including the merger, on Aug. 15 in New York.

[Associated Press; By DAVID KOENIG]

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