Partnership for the Good of Your Business

Justice department settles airline merger, avoids trial

On Behalf of | Nov 14, 2013 | Business Formation & Planning |

CEOs and other executives in Ohio may be interested in learning about the conclusion of a high-profile lawsuit concerning the U.S. Justice Department and two merging U.S. airlines. The Justice Department avoided trial by settling its lawsuit against the merger of US Airways and American Airlines, under the condition that the combined airline relinquish 148 spots at major airports to other airlines, including competitors that are less expensive.

Nearly two years ago, the airlines announced their merger after American Airlines filed bankruptcy. The recent settlement allows both airlines to join forces in order to become the largest airline in the world. According to Attorney General Eric Holder, the agreement has the potential to bring more competition to the airline industry, because the increased presence of lower-cost airlines at major airports in cities such as Chicago, New York and Los Angeles could afford airline passengers more options for both non-stop and connecting flights throughout the United States.

The merger is expected to be completed in December 2013, pending the U.S. Bankruptcy Court’s approval of the settlements. The CEO of the soon-to-be combined airline was pleased to have the lawsuit behind him and looks forward to the future. The airline, which will go by American, will be based in Dallas/Fort Worth, Texas. The CEO stated that because American will be losing key slots, the airline would need to determine how to continue to serve certain communities.

The lawsuit between the airlines and The Justice Department occurred because its business formation and planning strategy could have violated anti-trust laws. However, the suit was settled because both parties were able to arrive at a mutually beneficial agreement that did not infringe upon current legislation.

Source: USA Today, “Justice settles merger lawsuit with AA, US Airways“, Bart Jansen, November 12, 2013


FindLaw Network