American, US Airways aim to settle merger lawsuit

[October 31, 2013]  DALLAS (AP) -- American Airlines and US Airways will propose giving up some takeoff and landing rights at Washington's Reagan National Airport in hopes of settling a government lawsuit blocking their merger, two people familiar with the discussions say.

The offer could be rejected, and the airlines are still planning on the case going to trial Nov. 25, one of the people said Wednesday. Both spoke on condition of anonymity because the talks are private.

The U.S. Justice Department and six states sued in August to block the merger, which would create the world's biggest airline. They say it would restrict competition and raise prices, and that combining the two airlines would make them too strong at Reagan National -- controlling 69 percent of the takeoff and landing rights, called slots, and holding a monopoly on 63 percent of nonstop routes.

Reagan National is so busy that the government limits slots. It was not clear how many slots American and US Airways might propose to sell or lease to other airlines.

The airlines' proposal was reported Wednesday by the Wall Street Journal on its website.

Concessions at Reagan National have long been considered a key to any settlement. They would allow the Justice Department to claim that it had achieved more competition at the airport near downtown Washington. But government lawyers raised other, bigger concerns in their August lawsuit. They argued that the elimination of another airline -- following four other mergers in the past eight years -- would force consumers to pay more on hundreds of routes.

In a statement Wednesday, US Airways Group Inc. said it still believes "there ought to be a realistic possibility of settlement," but declined to discuss specifics. A spokesman for AMR Corp.-owned American said the airline is open to a "reasonable settlement," but also declined to comment further. The Justice Department declined to comment.

Both sides agreed this week to use a mediator suggested by the judge who will hear the case in U.S. district court in Washington.

Other airlines are watching closely.

The CEO of Southwest Airlines Co. said last week he was certain that Reagan National divestitures would be part of any settlement, and his airline would like to bid for the slots. The CEO of JetBlue Airways Corp. said last month that the merging airlines should give up some of their Reagan slots.

[Associated Press; By DAVID KOENIG]

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