World's biggest airline - AA and USAirways- set for takeoff next month
The world’s biggest airline has been (almost) cleared for takeoff. American Airlines and US Airways have reached an antitrust settlement with the U.S. government to allow their £11 billion merger to proceed with only limited concessions.
Ready to go: World's biggest airline
The pair now aim to close their transaction by December, under the name American Airlines Group Inc.The settlement still must be approved by a federal judge.
The giant airline will have a fleet of 1,500 aircraft, $39bn in revenues and would employ 100,000 people.Virgin Atlantic is expected to object.
US Airways and AMR, parent of American Airlines, agreed to give up space at several major airports across the U.S. reducing their combined daily departures at Reagan National Airport near Washington by about 15% and at La Guardia Airport in New York by about 7%.
They also pledged to retain the big hubs that underlie their combined network and continue service to certain smaller cities.
The settlement is seen as a victory for the carriers, because it left most of their merger plan intact.
Observers thought the airlines would have given up some of the airport slots or gates anyway to consolidate operations after their merger.
The settlement will affect just 112 of the new carrier's planned 6,500 daily flights, US Airways Chief Executive Doug Parker, who will lead the combined carrier, said in an interview.
He said the concessions were "not material enough to offset what we said the day we announced," which was that the merger would create more than $1 billion in total annual savings and revenue gains.
The US Justice Department said the divestitures were the biggest ever in an airline deal. Bill Baer, the department's antitrust chief, said that the settlement was better for competition than if the government had won a court injunction against the merger, because the concessions will allow low-cost carriers to expand at major airports.
"It will disrupt today's cozy relationships among the incumbent legacy carriers and provide consumers with more choices and more competitive airfares," he said.
Still,said the Wall Street Journal, the concessions are far more limited than what the Justice Department called for when it sued to block the merger in August, arguing that the deal would harm consumers by reducing air service and increasing fares.
For fliers, the settlement will mean more competition at some of the biggest US airports and on some of the most-traveled routes, particularly to and from Washington and New York.
The airlines agreed that the combined carrier would give up enough slots for 52 daily round-trip flights at Reagan and 17 round trips at La Guardia. That opens up highly sought-after space for rivals
George Hoffer, a professor of airline economics at the University of Richmond, said "It looks like the combined carrier is giving up a lot, but in reality, they're not," he said.