Justice Department Clears Merger of AA and US Airways

November 14, 2013 09:57 by Clayton Reeves in Capital Markets, M&A, Regulation  //  Tags: , , , , ,   //   Comments (0)
As reported in Deal Book, the Justice Department has cleared the $11 billion merger of American Airlines and US Airways. This paves the path towards creating the world's largest airline. The merger comes at the end of a tough period for airlines, which has seen high fuel prices, bankruptcies and labor issues. This is a new step in the industry's deregulation, and leaves only a few airlines that control the bulk of domestic and international flights. The remaining giants are American, Delta, United and United States domestic flight behemoth Southwest. The Justice Department claims that this merger will foster competition among market operators, but not everyone agrees. Transportation economics professor George Hoffer, from the University of Richmond, stated that the merger effectively removed one competitor from the market. He added that this could result in fare increases in many markets and fewer flights.  Investors, on the other hand, were obviously in favor of the deal, which creates a more formidable airline in the combined entity. All airline stocks were higher Tuesday, indicating that the market may agree with Dr. Hoffer on who wins from this deal. Read the full article here.

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