Airline Merger Trial – American Airlines and US Airways

0
695
American Airlines Merger

American Airlines and US Airways apparently closer to a clearing of the way to merge, creating the world’s largest airline.  A trial pitting the airlines against the U.S. Justice Department and several states would begin on Monday, November 25.  The previous mergers of Delta and Northwest in 2008, then United with Continental in 2010, have opened the way for American Airlines proposed an additional merger to US Airways.

The US government are opposed to the $11 billion merger merger, with fears the prospect of another giant carrier creating higher fares, fortress hubs and an anticompetitive industry.  The airlines responded that the deal would allow them to combine operations and reduce costs, generating savings they could pass onto fliers and invest in better service in the air. A November trial announced last Friday will determine if the merger can at last go through.

In its complaint, the Justice Department focused on Ronald Reagan National Airport, just outside Washington, D.C., where the two companies control a combined 70% of takeoff and landing slots and more than 1,000 city pairs where the two airlines dominate the market.

In the meantime, with the announcement of a trial date, both airline closed up in New York Stock Exchange trading.  The Justice Department wish to block the deal, saying it would lead to higher prices for customers.  The companies have said that the deal is critical for American Airlines, whose parent, AMR Corp, has been operating under Chapter 11 bankruptcy protection since late 2011.

Airlines, with problems in the price of jet fuel, a downturn in the economy and the difficulty of getting landing rights at top airports, particularly those serving the North Atlantic route have contributed to uncertainty within sections of the airline business.  With a drive to look towards modernizing fleets and it is argued that larger more profitable carriers are better able to plan and adopt new technologies.  However, the playing field is continually evolving and there has provided a growth of smaller carriers operating point to point flights and siphoning off travelers from hub airports to smaller ones.

In a twist to the merger story, Emirates’ Airline recently announced a Milan-New York service in October and Dubai-Boston service, providing passengers out of Boston Logan International Airport with another option to reach dozens of international destinations.  A recent report, suggested that Emirates likely already carries the most traffic between the U.S. and India, over that provided by the three alliances of Oneworld, Skyteam, and Star through European hubs.  Emirates operates the world’s largest fleet of Boeing (BA 777s), with more than 175 of them and is the largest Airbus A380 operator. It currently serves 134 destinations including seven in the U.S: Dallas, Houston, Los Angeles, New York, San Francisco, Seattle, and Washington.

NO COMMENTS

LEAVE A REPLY