The Department of Justice, along with attorneys general from six states and the District of Columbia, is challenging a merger that would create the world's largest airline, the Department of Justice announced today.
The group filed an antitrust lawsuit opposing the $11 billion merger of US Airways Group (NYSE: LCC) and AMR Corp. (NASDAQOTH: AAMRQ), the parent company of American Airlines, on the grounds that it "would substantially lessen competition for commercial air travel in local markets throughout the United States and result in passengers paying higher airfares and receiving less service," according to the DOJ statement.
The attorneys general represent the states of Texas, the headquarters of American Airlines; Arizona, the headquarters of US Airways; Florida; Pennsylvania; Tennessee; Virginia; and D.C.
U.S. Attorney General Eric Holder said in the statement, "By challenging this merger, the Department of Justice is saying that the American people deserve better. This transaction would result in consumers paying the price -- in higher airfares, higher fees and fewer choices."
The DOJ said the merger would result in only four airlines controlling more than 80% of the U.S. commercial air travel market.
Passengers using Washington Reagan National Airport would be particularly affected by the merger, the DOJ said. The merged airline would control 69% of the take-off and landing slots and "would have a monopoly on 63% of the nonstop routes served out of Reagan National airport." The Justice Department had been expected to pressure American and US Airways into giving up some takeoff and landing slots at Reagan National Airport.
Last week, the merger was approved by the European Commission.
The Associated Press reports that a spokesman for US Airways Group Inc. had no immediate comment and that AMR Corp. did not immediately return messages seeking comment. Shares of both companies plunged, and other airline shares fell sharply as well.
AMR and US Airways officials had said their merger would help consumers by creating a tougher competitor for United and Delta.
-- Material from The Associated Press was used in this report.