American-US Airways Merger Blocked by DOJ Antitrust Lawsuit

The American Airlines-US Airways merger should be blocked to protect consumers from higher fares and fees, the U.S. Justice Department argues in an antitrust lawsuit filed Tuesday.

The antitrust lawsuit (attached below) upends American's plans to exit bankruptcy via a deal that would create the world's biggest airline. United Airlines and Delta Air Lines, which both grew through mergers of their own in recent years, are currently the two largest domestic carriers.

The DOJ, along with the attorneys general of six states and the District of Columbia, argue the proposed American-US Airways merger would lead to less competition in the industry, higher fares and cut flight service. The Department the merger would result in four airlines controlling more than 80 percent of the U.S. commercial air travel market.

"This merger will leave three very similar legacy airlines--Delta, United and the new American--that past experience shows increasingly prefer tacit coordination over full-throated competition," says the lawsuit, filed in Washington, D.C., federal court. "Competition at [Washington's] Reagan National [Airport] cannot flourish where one airline increasingly controls an essential ingredient to competition."

US Airways CEO Doug Parker vowed to fight the lawsuit in a letter Tuesday to airline workers.

"We are extremely disappointed in this action and believe the DOJ is wrong in its assessment," Parker said. "We will fight them."

American-US Airways Merger Challeged by DOJ Antitrust Lawsuit