UNITED, US AIRWAYS TERMINATE MERGER PLAN
United Airlines and US Airways terminated their merger plan Friday, the same day the U.S. Department of Justice said it intends to file suit to block a proposed deal.
“If this acquisition were allowed to proceed, millions of consumers would have little choice but to pay higher fares and accept lower quality air service,” said Attorney General John Ashcroft.
US Airways said that “while disappointed that the merger with United will not go forward, we nevertheless must respect the Justice Department’s decision.”
The DOJ’s antitrust division said the acquisition would have given United “a monopoly or duopoly” on nonstop service on more than 30 routes on which consumers spend $1.6 billion annually, and also would have “substantially limited” the competition United faced on other routes representing over $4 billion in revenues.
United Airlines and US Airways had initially announced their proposed merger in May 2000. A year later, both airlines asked Justice to delay action until further notice, pending the submission of new proposals. On July 12, the parties notified the department that they wanted to close the transaction without further changes, and requested a prompt decision.
Justice said the acquisition would have violated antitrust laws by reducing competition in hub-to-hub nonstop markets, U.S. East Coast connect markets, non-stop markets in Washington, D.C., and Baltimore, and on international routes.
The department expects its lawsuit to block the merger to be joined by the states of California, Connecticut, Delaware, Iowa, Maine, Maryland, Massachusetts, Michigan, Minnesota, New York, Pennsylvania, and Vermont, among others.