WASHINGTON — Looks like the U.S. Airways and American Airlines merger will be delayed in the U.S. Europe, which was thought to be the tougher political opponent, was already on its way to approve the merger.
Reuters reports that the proposed merger will not happen, at least if the U.S. Department of Justice (DOJ) has any say in the matter.
The DOJ said that consumers will be hurt by the merge by paying higher fares and fees. It was a surprising move by the federal government and could block a massive industrial restructuring that investors were keenly anticipating. It could also hurt American Airlines’ attempt to get out of a 2-year bankruptcy state.
Other airline mergers between United and Continental and Delta and Northwest were approved. This blocking of the merger indicated that the DOJ does not want concessions but to block the $11 billion deal in its entirety.
The airline industry is struggling to stay afloat and this move can jeopardize its full recovery. It is a strange move by the Obama administration and the DOJ, which is run by Attorney General Eric Holder, to hold up an airline merger after approving two other ones earlier.