American-US Air settlement with DOJ includes small tweak at LAX

usair.jpgAt least that's how it appears in going through the proposed 28-page agreement between the two airlines and the government. The brunt of the settlement involves the two carriers divesting 104 slots at Washington-Reagan National Airport and 34 at NY's La Guardia. These are the two facilities where American and US Air dominated. At LAX, the combined airline would lose two gates, 31A and 31B, at Terminal 3, where US Air had been scheduled to move into from Terminal 1 early next year. (Southwest, which dominates Terminal 1, plans a major refurbishing.) The L.A. portion of the settlement seems minimal considering that American is by far the more dominant carrier of the two (762,000 departing seats by the two airlines fly out of LAX each year). Other slot sales would be made at airports in Boston, Dallas (Love Field), and Miami. Just to recap, the Justice Department sued to block the merger in August, maintaining that the $16-billion deal would restrict competition and drive up fares. American and US Air said their deal would increase competition by creating another big competitor to United and Delta. The settlement, which came just a few weeks before the start of an antitrust trial, must still be approved by the courts. If all goes as planned, the merger could be completed next month. From AP:

If the settlement is accepted, the combined American and US Airways would operate 44 fewer daily departures at Reagan National and 12 fewer at LaGuardia than they would have without concessions. But the new American will still be the biggest carrier at Reagan National. The two airlines run about 290 takeoffs a day at Reagan National -- about two-thirds of the airport's total -- and 175 at LaGuardia now. Standard & Poor's analyst Jim Corridore said the airlines gave up more than he expected but the settlement shouldn't change the financial benefits of the mergerto the companies. The companies and some airline industry experts said the Justice Department had a weak case, especially after allowing four big airline mergers in the past eight years with few conditions. American and US Airways, however, were not willing to bet their fate on the decision of a federal judge.

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Mark Lacter
Mark Lacter created the LA Biz Observed blog in 2006. He posted until the day before his death on Nov. 13, 2013.
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