US: DOJ throws major turbulence towards AA, United merger plans

Despite optimism of relatively smooth sailing through the antitrust review process, American Airlines and US Airways have been hit with a lawsuit filed in Washington by the US Department of Justice, which is looking to block the deal.

Reports early Tuesday said the merger, creating the world’s largest airline, would hike prices and reduce competition in the market. Specifically, the DOJ claims the transaction would leave no incentive for US Airways to lower prices. Reports cited an anonymous source of the details of the lawsuit. The lawsuit may not only come as a surprise to the airlines, but also to industry experts who also predicted regulatory clearance for the deal, which earned approval by the European Commission earlier this month.

The parties first announced merger plans last February, though the DOJ continues to review the deal. Following the news of the regulator’s lawsuit, shares for US Airways fell up to 11 percent. American Airlines is banking on the merger as a way out of bankruptcy.

Full Content: Bloomberg

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