Antitrust Concerns over U.S. Airways and AMR Merger


Federal approval of the potential merger between U.S. Airways Group Inc. (NYSE: LCC) and bankrupt AMR likely will hinge on what the carriers are willing to give up. Antitrust experts believe that the new company will have to abandon some routes where the marriage would make the new airline completely dominant.

According to Reuters:

To preserve competition, antitrust experts say, the Justice Department is likely to ask for divestitures in US Airways' hub at Washington's Reagan National and Charlotte, N.C., and AMR's hub in Dallas. Outside these areas, the carriers fly different routes for the most part.

"Overlapping routes are bad, and connecting routes are good," said Herbert Hovenkamp, who teaches antitrust at the University of Iowa College of Law.

"If you put these two airlines on a map you're going to see a lot of complementary routes but you're not going to see very many where the two of them fly on the same route," he added.

Filed under: 24/7 Wall St. Wire, Airlines, Mergers and Buy Outs Tagged: LCC