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DOJ Okays US Air-American Airlines Merger: So What Happens Next?

Locations in this article:  Chicago, IL Dallas, TX Los Angeles, CA Miami, FL St. Louis, MO

American_Airlines_merger This morning the Department of Justice announced it settled its lawsuit against the US Airways – American Airlines merger. Peter looks at what this means for the airlines, for U.S. air service and for travelers.

From the I Told You So Department: Today the Justice Department announced it reached a deal whereby it would drop its opposition to the proposed American/US Airway merger. And, as I predicted, the settlement involves some horsetrading of valuable slots — and a lot of them at Reagan National Airport in Washington, D.C.

What this means — other than that US Air executives can resume house hunting in Dallas —  is that the deal will now go through and the two airlines will soon become one. There will be no trial on November 25, no lengthy protracted legal battle.

Now the real questions remain: What will be the impact on many airports, US Airways and American employees, and, last but hopefully not least, travelers?

The agreement will call for the new airline to give up 52 valuable slots at Reagan National in, plus 17 slots in LaGuardia and two gates at Dallas Love Field, Boston’s Logan Airport, Chicago’s O’Hare, Miami and Los Angeles.

In the short term, there will be no apparent changes, But after January 1, watch this space.

Let’s take a little walk through history. A merger is announced, and the press release states that as a result of the merger, the newly formed company is the largest airline in the world… for the moment. Then the company starts dropping employees, routes, airports and service. Let us not forget that when American filed bankruptcy, part of its reorganization plan involved laying off about 13,000 employees.

But what remains to be determined is what side agreements, if any, the mayors of a number of cities (and some state attorneys general) may have forced to guarantee continued air service (at current levels) to their cities. All I can say is I hope that the mayors and chambers extracted agreements — in writing — that their cities would not lose service as a result of the merger. Actually, all the mayors had to do is consult with the mayors of St. Louis, Cincinnati, and most recently, Memphis, to get a different perspective of what happens when airlines either merge or are absorbed by other carriers. Service has been drastically reduced, some might say decimated — in those cities. In fact, mid-sized U.S. cities have lost 25 percent of their available airline seats in the past two years. That’s a fact.

So why are the mayors so openly supportive of this merger? Beats me.

Fasten your seat belts. Mergers are often bumpy rides for the companies themselves, as they attempt to integrate systems and work forces and policies…but it’s also a bumpy ride for the cities they serve.

Don’t miss Peter’s blog, What We’re Giving Up in the American Airlines/US Airways Merger

By Peter Greenberg for PeterGreenberg.com