The Wall Street Journal
By Brent Kendall and Jack Nicas
Nov. 3, 2013 6:49 p.m. ET
U.S.
antitrust authorities want to see a broad package of divestitures from
AMR Corp. and US Airways Group Inc.as part of any deal to settle the
government's challenge to their merger plan, people familiar with the
matter said.
The people said talks are under way between the two
sides three weeks before a trial of the antitrust challenge is set to
open in Washington.
The Justice Department's antitrust suit,
which sought to block the merger of AMR's American Airlines and US
Airways, argued that the deal would harm consumers by reducing air
service and increasing fares. It listed more than 1,000 routes on which
regulators believed competition would suffer.
The opening of
settlement talks suggests that the government isn't taking an absolute
stand against the deal, and that a trial isn't a certainty. At the same
time, however, the airlines might resist the broad concessions that the
government is seeking.
A person familiar with the Justice
Department's thinking said department lawyers insist that any settlement
should include divestitures at key airports throughout the U.S. The
department believes that the two airlines would need to divest assets at
those airports to ensure that their merger wouldn't limit consumer
choices on nonstop and connecting flights or harm consumers by raising
fares, this person said.
The airlines are prepared to give up
slots at Reagan National Airport outside Washington, where US Airways is
already the dominant carrier, and make some divestments at other U.S.
airports, two people familiar with the negotiations said last week. A
person familiar with the process said Sunday that the airlines'
settlement proposal would include divestments at other U.S. airports
besides Reagan National.
Some of the busiest U.S. airports have
limited room for competitors to expand, either because takeoff and
landing slots are limited or because there aren't enough gates.
LaGuardia and John F. Kennedy International airports in New York are
among those with limited slots, while airports in Chicago and Los
Angeles have limited gate space.
Another asset in limited supply
is permission to fly to some international destinations. US Airways
recently obtained rights to offer service to São Paulo, Brazil.
If
combined at their current size, AMR and US Airways would vault past
United Continental Holdings Inc. and Delta Air Lines Inc. to become the
largest carrier in the world by traffic. AMR and US Airways say the
merger would offer fliers more choice and a bigger route network.
The
Justice Department's suit challenging the merger warned against
overconcentration in the U.S. air-travel market if the deal went ahead
as planned, because it would leave the U.S. with just four airlines
controlling more than 80% of the domestic market.
Both sides have said they are prepared to go to trial, which is scheduled to begin Nov. 25.
Source: http://online.wsj.com
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