Mayors ask U.S. AG to settle lawsuit over airline merger

CHARLOTTE, N.C. (Legal Newsline) — The mayors of seven major cities sent a letter to U.S. Attorney General Eric Holder this week, asking him to settle the lawsuit over the proposed American Airlines and US Airways merger.

The mayors of Charlotte, Chicago, Dallas, Fort Worth, Miami, Philadelphia and Phoenix, representing a majority of “hub” cities for both airlines, asked Holder to allow the merger to proceed.

In February, the boards of directors of both AMR Corp., the parent company of American Airlines Inc., and US Airways Group Inc. unanimously approved a definitive merger agreement under which the companies will combine to a create a “premier global carrier” that will have an implied combined equity value of about $11 billion — based on the price of US Airways’ stock as of Feb. 13.

In August, a coalition of six states, the U.S. Department of Justice Antitrust Division and the District of Columbia filed a federal court complaint challenging the merger, which would make the combined airline the largest worldwide carrier.

The complaint alleges reducing the number of major airlines from five to four would make fare and fee increases easier, and would make airlines even more profitable than they already are.

The six states are: Arizona, Florida, Pennsylvania, Tennessee, Texas and Virginia.

Texas has since settled with the airlines. Florida’s attorney general, Pam Bondi, has been pressured by the state’s federal lawmakers to back the merger.

In their two-page letter Wednesday, the mayors called the lawsuit “ill-conceived.”

“We support the merger of American and US Airways because it is based on growth which benefits consumers and our communities,” they wrote. “A hub airport is only as good as the route network it supports, and our cities represent hubs throughout the United States that would benefit from a broader route network.”

The mayors contend the combination of American Airlines and US Airways creates a better network than either carrier could build on its own.

“American’s substantial operations throughout the central United States provide critical coverage where US Airways is underdeveloped. US Airways’ substantial operations throughout the Northeast do the same for American,” they wrote.

“Bringing together these complementary operations creates a better network that will carry more passengers to, from and through Charlotte Douglas International Airport, Philadelphia International Airport, Phoenix Sky Harbor International Airport, Chicago O’Hare International Airport, Dallas/Fort Worth International Airport and Miami International Airport.

“This increase in passenger traffic will multiply the beneficial effects those airports have on jobs and our local economies.”

American Airlines has said the combined airline — which will be called American Airlines — will offer more than 6,700 daily flights to 336 destinations in 56 countries and is expected to maintain all hubs currently served by both airlines, resulting in more travel options for customers.

The company will be headquartered in Dallas-Fort Worth, but will maintain a “significant corporate and operational presence” in Phoenix.

“The combined airline will have the scale, breadth and capabilities to compete more effectively and profitably in the global marketplace,” Doug Parker, chairman and chief executive officer of US Airways, said in February.

“Our combined network will provide a significantly more attractive offering to customers, ensuring that we are always able to take them where they want to travel, when they want to go.”

The merger was set to close in September, but still needs government regulatory approval.

In a statement Wednesday, the airlines said they are “grateful” for the mayors’ support.

A group of chambers of commerce sent a similar letter to Holder Thursday.