Justice Reaches Deal To Allow American, US Airways Merger

The Justice Department has reached a deal that will allow for the merger of American and US Airways, opening the door to the creation of the world's largest airline.

The merger still needs final approval from a bankruptcy court.

The U.S. had hoped to block the merger arguing that it would result in less competition and higher prices for consumers.

Under the deal announced Tuesday, American and US Airways have agreed to "divest slots and gates at key constrained airports across the country to low cost carrier airlines (LCCs) in order to enhance system-wide competition in the airline industry resulting in more choices and more competitive airfares for consumers."

In a press release, the Justice Department said the agreement will increase the presence of low cost airlines at Boston Logan International, Chicago O'Hare International, Dallas Love Field, Los Angeles International, Miami International, New York LaGuardia International and Ronald Reagan Washington National.

"This agreement has the potential to shift the landscape of the airline industry," Attorney General Eric Holder said in a statement. "By guaranteeing a bigger foothold for low-cost carriers at key U.S. airports, this settlement ensures airline passengers will see more competition on nonstop and connecting routes throughout the country."

American said in a press release that it also agreed to keep its hubs in Charlotte, New York (Kennedy), Los Angeles, Miami, Chicago (O'Hare), Philadelphia and Phoenix operating at historical levels for three years.

"Completion of the merger remains subject to the approval of the settlements by the U.S. Bankruptcy Court, and certain other conditions," American said. "The companies now expect to complete the merger in December 2013."

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