American air wars

In an unexpected move last week the US Justice Department filed a lawsuit to block the merger of American Airlines and US Airways, saying the deal would hurt consumers by leading to higher fares.  In recent times such moves have gone through without problems resulting in much stronger airlines.

"I think this is another governmental mistake", former American Airlines' Chief Executive Robert Crandall told Reuters news agency.

By allowing mergers between United Airlines and Continental, and Delta Air Lines and Northwest, the government "made a third large merger inevitable", he said.

The official amalgamation was expected in the third quarter of this year and any delay, or a collapse of the deal, will have serious knock-on effects with both airlines moving towards a togetherness.   The effective take-over of American by US Airways had been approved by the EU with US Airways' management team, including CEO Doug Parker, retaining most of the senior positions.

American partners British Airways and it was assumed that the renamed US Airways would drop its Star Alliance membership and also move terminals at Heathrow next April.

"Consumers deserve the benefit of that continuing competitive dynamic", Bill Baer, head of the Justice Department Antitrust Division, said in a statement.  American Airlines continues to trade under Chapter 11. www.aa.com

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