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American and US Airways to fight DOJ challenge to merger

American Airlines and US Airways plan to fight the US Department of Justice's (DOJ) challenge to their proposed merger in court.

"We and US Airways will vigorously defend our position," says Tom Horton, chairman and chief executive of Fort Worth-based American, in a letter to employees today. "While we do not yet know how long the court process will run, it will likely take a few months."

Doug Parker, chairman and chief executive of Tempe, Arizona-based US Airways and future chief executive of the merged carrier, echoes the position in his own letter to the carrier's employees: "We will fight them. We are confident that by combining American and US Airways we are enhancing competition, providing better service to our customers and improving the industry as a whole."

The DOJ and district attorneys from Arizona, Florida, Pennsylvania, Tennessee, Texas, Virginia and Washington DC filed suit alleging negative competitive impacts if the merger were to go through with the US District Court for the District of Columbia today.

"[The merger] would substantially lessen competition for commercial air travel throughout the US," says Bill Baer, assistant attorney general in charge of the DOJ's antitrust division, during a media call today.

The DOJ alleges that the merger would reduce competition, and result in the concentration of more than 80% of US air traffic with four carriers, higher airfares and less service, in its challenge.

Separate comments by Parker and Horton on the strength of both American and US Airways on a standalone basis were cited as a reason that either carrier could prosper without the merger by the DOJ.

"We think the right solution here is a full-stop injunction," says Baer. He anticipates the challenge to block the deal for "period of time", but would not specify further on a timeline.

The European Commission approved the deal under the condition that American and US Airways release one slot pair at London Heathrow for a new flight to Philadelphia on 5 August.

Creditors at American approved the airline's bankruptcy reorganisation plan centred on the merger in voting that closed 29 July. This followed the approval of the deal by US Airways shareholders on 12 July.

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