US apt to settle case against merger

Airlines would sell assets; effect on Logan is small

Combining American Airlines and US Airways would create the largest airline in the world — a fact that gave rise to fears of less competition and more burdens on consumers.

Joe Raedle/Getty Images/File 2013

Combining American Airlines and US Airways would create the largest airline in the world — a fact that gave rise to fears of less competition and more burdens on consumers.

NEW YORK — The Justice Department has reached a preliminary agreement to settle its fight with American Airlines and US Airways over their proposed merger, according to a court document filed Tuesday.

American and US Airways would sell 104 takeoff and landing slots at Ronald Reagan National Airport in Washington, 34 slots at La Guardia Airport in New York, and various assets at five other airports, including Logan International Airport in Boston, O’Hare in Chicago, and Los Angeles International Airport.


The settlement needs to be approved by US District Court in the District of Columbia as well as a judge overseeing American’s bankruptcy proceeding. The airlines are confident they can close the merger deal by mid-December.

The preliminary settlement forestalls a trial on the Justice Department’s lawsuit.

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Eric H. Holder Jr., the attorney general, had indicated Nov. 4 that any agreement would revolve around concessions on takeoff and landing slots, particularly at Reagan National. The two airlines control about two-thirds of the slots there.

The merger is not expected to have a big impact at Logan, where US Airways and American compete on only one route, to New York. The combined airline could carry 24 percent of the airport’s 29 million annual passengers, second only to JetBlue Airways. JetBlue carries about 27 percent of Logan’s passengers. Under the settlement, the airlines would give up two gates and related facilities at Logan.

American and US Airways are both in Terminal B at Logan, on opposite sides of a parking lot that divides the terminal. The Massachusetts Port Authority is working to connect the concourses behind security checkpoints by March.


United Airlines, which has been operating out of terminals A and C since its merger with Continental Airlines, is scheduled to move in.

The airport has not said how it will handle the logistics after American and US Airways merge or what will happen with the two gates the airlines have to give up under the settlement. But Massport said there will be room for new carriers and the growth of current airlines.

In September, Judge Sean H. Lane of US Bankruptcy Court in Manhattan approved American’s exit from its two-year bankruptcy proceeding, during which American agreed to merge with US Airways. That move gained the backing of creditors as well as its three main labor groups.

Antitrust regulators challenged the combination in August, saying it would harm competition and passengers.

The merged airline is now expected to operate 44 fewer daily departures from Reagan National and 12 fewer from La Guardia.

The Justice Department said the agreement would increase the presence of low-cost carriers at major airports.

William Baer, assistant attorney general, said the deal “opens up the marketplace as never before.” He said it would “disrupt today’s cozy arrangements” among the largest carriers, lower fares on crucial routes, and give consumers more flight choices. In the past, he said, even modest opportunities for low-cost carriers to gain slots aided consumers.

But some analysts disputed that idea. “It doesn’t seem to me that the government secured that much from the settlement,” said Carl W. Tobias, a professor at the University of Richmond School of Law.

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