American Airlines and US Airways defended their proposed merger against a U.S. antitrust lawsuit, saying the combination would generate more than $500 million a year in benefits to consumers.
The combined airline will create an effective competitor to Delta Air Lines and United Airlines, the airlines said in filings Tuesday in federal court in Washington arguing that the U.S. effort to stop the deal should be denied.
"It is the complaint — by interposing the heavy hand of federal and state regulation — which will lessen competition by precluding the market from creating new and competitive flight options for passengers," Tempe, Ariz.-based US Airways said.
The U.S. Justice Department, joined by seven states and the District of Columbia, are suing American parent AMR Corp. and US Airways to block the merger, arguing the tie-up would reduce competition and hurt consumers. U.S. District Judge Colleen Kollar-Kotelly has scheduled the case to go to trial Nov. 25.
The U.S. and the attorneys general argue the proposed merger, by reducing the number of legacy carriers from four to three, would increase the likelihood of coordinated behavior among the airlines, leading to higher fares and fees and diminished service. American and US Airways can compete effectively on their own, the government has said.
The main issue in the case is whether the merger would lead to cuts in service and increases in domestic fares, said Allen Grunes, a lawyer with GeyerGorey in Washington who formerly worked in the Justice Department's antitrust division.
"The American and US Airways answers paint a picture of the merger as some kind of silver bullet that will miraculously transform the two companies into the greatest thing since sliced bread," he said. "That's more than a little optimistic, and it's going to be tough for them to prove it."
