Sunday, February 10, 2013

Will feds let US Airways-American merger fly?

Sometime this week American Airlines is expected to merge with US Airways, with the combined airline using the American brand and US Airways CEO Doug Parker expected to run the enterprise.  The new American would be the world's largest airline, leaping over United (#1) and Delta (#2).  Currently American is #3 and US Airways is #5 in terms of US market share. 

Economically the deal makes lots of sense.  US Airways has a strong domestic presence but lacks American's international routes.  The two airlines do not have very many overlapping routes, but they would most likely eliminate some redundant hubs.

But will the deal pass the sniff test at the Department of Justice?  Delta was allowed to acquire Northwest in 2008 and United was allowed to acquire Continental in 2010, so one would think that this merger would be allowed to proceed based on these precedents.  On the other hand, DOJ has sued to stop the acquisition of small fry Corona by big-boy Ambev, as well as AT&T's bid to buy T-Mobile. WSJ reports that the European Union also would have to sign off because of the large number of trans-Atlantic routes involved.

Stay tuned.  To paraphrase Bette Davis in "All About Eve," fasten your seat belts, it's going to be a bumpy ride. 

No comments:

Post a Comment