U.S. Sues to Block Merger

August 14, 2013

In a move that surprised industry and union observers, the U.S. Department of Justice filed suit on Tuesday to block the merger between American Airlines and US Airways, charging that it was anti-competitive and would harm consumers.

Both airlines immediately vowed to fight the move in court, predicting the merger eventually would be approved. But the filing will at least create a delay of months for a merger that many expected to be completed by October of this year.

Unions representing employees at both airlines also expressed their opposition to the move, having already negotiated agreements with executives who would run the new merged American Airlines. Roger Holmin, president of the US Airways Flight Attendants, AFA/CWA, criticized the Justice Department for ignoring how US Airways essentially rescued American, providing a way out of bankruptcy. “In the name of encouraging competition, DOJ is engaging in a fantasy that risks destroying the only merger that has a chance of competing with the nation’s other mega-carriers in order to protect consumers,” he said.

The Justice Department previously had approved mergers between Delta and Northwest, United and Continental, which became the two largest airlines in the world. The pending merger between American Airlines and US Airways would mean that our airline would surpass those two in size and scope. A merger between Southwest and Air Tran also was approved last year.

In a Hotline news release, Laura Glading, president of the APFA at American Airlines, added that the “reason American is in bankruptcy is because it couldn’t compete in the environment created by the airline mergers of the past few years, which occurred with DOJ’s blessing. Now the game is in the third quarter and they want to change the rules,” Glading said. “It’s ludicrous.”

Some speculated that the antitrust filing was simply an attempt by the government to force the two airlines to give up certain routes to gain approval for the merger. If the merger goes through, 80 percent of all U.S. routes would be controlled by the largest four airlines.

While the filing may be simply a move to gain bargaining leverage over routes, that’s little consolation for the thousands of American Airlines agents who have been looking forward to gaining a voice with CWA at the new American. Our dream appears to be on hold again.

Joint efforts with US Airways agents will continue, but CWA and the International Brotherhood of Teamsters, which represents agents in the former America West terminals, announced they are suspending a scheduled ratification vote on their agreement to work together on the campaign to represent agents at the merged airline. The merger is on hold for now.