Feds Sue US Airways

US Airways – American Airlines Merger On the Rocks

Blocking the Merger is a Good Deal for Flyers

US Airways bid to acquire (merge with) American Airlines has been stalled by a surprise Justice Department lawsuit. Bill Baer, head of the Justice Department Antitrust Division said:

“The department sued to block this merger because it would eliminate competition between US Airways and American and put consumers at risk of higher prices and reduced service. Both airlines have stated they can succeed on a standalone basis, and consumers deserve the benefit of that continuing competitive dynamic.”

I've been ranting about this since early last year (see the links to my previous blogs below), but it appeared the merger was sailing through the regulatory process and all but a done deal. However, it looks like the celebration by the CEO's of both airlines may be a bit premature. US Airways CEO, Doug Parker, was slated to take over the new combined company, while American Airlines CEO, Thomas Horton would depart with $20 milion in severance pay. Not bad for the guy who took American Airlines into bankruptcy.

Evidently, their own comments have come back to haunt them. The Justice Department complaint relies on quotes from the airlines internal emails as well as public comments and presentations to investors by airline executives noting increased fares and fees occurring after previous mergers.

Kudos to the Justice Department for finally stepping up to the plate. Too bad, they've let it get to the point where we're down to 5 major airlines that are getting away with murder in higher fares and outrageous fees to check luggage, etc.

Here are my previous blogs from earlier this year and way back into last year when this mess started.

Airline Merger – A Bad Deal

Another Bad Merger Idea

I'd love to hear your thoughts.

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