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American Airlines agrees deal with justice department

American Airlines agrees deal with justice department

American Airlines and US Airways have settled the litigation brought by the US department of justice, the states of Arizona, Florida, Michigan and Tennessee, the commonwealths of Pennsylvania and Virginia, and the District of Columbia challenging the merger of the two airlines.

The companies also announced an agreement with the department related to small community service from Washington Reagan National Airport.

Tom Horton, chairman of American parent company AMR, and incoming chairman of the board of the combined company, said: “This is an important day for our customers, our people and our financial stakeholders.

“This agreement allows us to take the final steps in creating the new American Airlines.”

Under the terms of the settlement, the airlines will divest 52 slot pairs at Washington Reagan National Airport and 17 slot pairs at New York LaGuardia Airport, as well as certain gates and related facilities to support service at those airports.

The airlines also will divest two gates and related support facilities at each of Boston Logan International Airport, Chicago O’Hare International Airport, Dallas Love Field, Los Angeles International Airport, and Miami International Airport.

The divestitures will occur through a department of justice approved process following the completion of the merger.

Despite the divestitures, the new American is still expected to generate more than $1 billion in annual net synergies beginning in 2015, as was estimated when the merger was announced in February.

The department of justice had argued the merger would adversely impact on passengers, forcing prices higher.

However, the two airlines argued the merger would create a major competitor to Delta Air Lines and Continental Airlines, both of which have recently been boosted by major mergers of their own.

Doug Parker, chairman, US Airways, and incoming chief executive of the combined airline, said: “This is very good news and we are grateful to all who have made it happen.

“In particular, we are thankful to our employees, who throughout this process continued to believe in a better future as one airline and who voiced their support passionately and consistently.”