Tags: American | US | Air | merger

WSJ: US Opposition to American-US Air Merger Doesn't Fly

Sunday, 18 Aug 2013 02:49 PM

By Dan Weil

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The Department of Justice (DOJ) has made a mistake in opposing the merger of American Airlines and US Airways based on antitrust concerns, according to a Wall Street Journal editorial.

The two airlines have only 12 non-stop overlaps in the more than 900 domestic routes that they fly, Journal editors write. "American flies to 48 cities not served by US Airways, and US Airways flies to 64 that American doesn't."

The DOJ's tortured reasoning in deciding to oppose the merger "suggests that [its] real motivation is that airlines are finally profitable again, which must mean something nefarious is going on," the editorial says.

Editor’s Note: 399% Stock Market Rally Predicted (Buy These 4 Stocks Now)

In explaining the DOJ's action, Assistant Attorney General for antitrust William Baer said "neither airline needs this merger to succeed."

Journal editors' take on that remark: "Since when is that a standard for antitrust law, and how would he know?"

Excess capacity has long plagued the U.S. airline industry, and it has suffered from boom-bust cycles, the editorial says.

"Especially with Delta and United strengthened, airline competition will be enhanced by a third global competitor, along with JetBlue, Southwest and various strong regional players," Journal editors state. "Even the unions agree and support this merger."

A USA Today editorial also backs the merger. "Consolidation has helped bring needed stability to an industry that just a few years ago was hemorrhaging money, struggling to cope with rising fuel costs, and plagued by flight cancellations, delays and spotty service," the editorial says.

"This history needs to be considered and balanced against a desire to have more carriers."

Editor’s Note: 399% Stock Market Rally Predicted (Buy These 4 Stocks Now)

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