American Airlines and US Airways have reached an antitrust settlement with the U.S. government that would allow their $17.2B merger to take place. The government initially had antitrust concerns over the merger and how it would affect flights at popular Washington DC airport Regan National. The two airlines currently control about 69% of the slots at Regan, which is the most popular airport among members of Congress.
The airlines agreed to give up 15% of their daily departures at Regan and 7% at La Guardia, which will allow competition to pick up those departures and is expected to create lower rates for flights from these locations. They also agreed to retain the major hubs that are currently supported by the two airlines across the country. These and many of the concessions the airlines made would have likely occurred anyways during the merger as part of cost cutting and efficiency measures. In all, only 112 of the carrier’s planned 6,500 daily flights will be affected. However, the Justice Department describes these concessions as a win, saying these are the most divestitures ever made in an airline deal.
The deal is expected to add $1.5B annually in revenue to the combined company and cost savings are expected to bring the total to $40B in operating revenue for the new organization. Together, the companies will employ over 100,000 people, most of which are unionized. The deal would make them the largest airline by flight volume with more than 6,400 flights daily to 336 locations in 56 countries. The combined airline will have American Airlines branding and will be renamed American Airlines Group. The merger is cleared for takeoff in December with US Airways CEO Doug Parker slated to captain the combined company with the US Air leadership team out of American’s headquarters in Fort Worth, Texas.
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