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Posted by: Maricopa Lawyers on Aug 22, 2013

The U.S. Department of Justice is attempting to block a merger of bankrupt American Airlines and U.S. Airways, which would create the largest airline in the world. The DOJ claimed that if the two were to integrate, there would be less competition, and lead to higher fares for customers.

 

Officials in three states, including Florida, have voiced their support of the merger. Miami Mayor, Carlos Gimenez, asked the US to withdraw the lawsuit because of the threat to local jobs. American Airlines is responsible for around 70% of the flights at the Miami airport, and is also the largest local employer. The airport is considered a “gateway to the Americas” for those living in Latin countries, and is vital to businesses. While the mayor is in support of the merger, other officials in the state and many other places are not on board.

American Airlines filed for Chapter 11 bankruptcy in 2011, and has thus spent approximately $500,000 a day on legal expenses which have come out to around $150 million. The DOJ claims to have no backup plan or considerations for a settlement at the moment.

There have been many mergers in the past few years including Delta and Northwest, and Continental with United Air. American has already merged Trans with Caribbean Airways, Air California, Reno Air and TWA in the past.

Some airline analysts believe that the chances of the merger approval are 50-50 while the DOJ claims it has no interest in settling. Various unions and employees have been actively appealing to the white house in order to save their jobs, and the jobs of people in Miami and other cities. Some groups have pledged to bring the case to the federal court, if needed, to protect and benefit their hometowns.