U.S. Seeks to Block Airline Merger.

[elleng]

Source: nyt

(Sorry if dupe; been out for a few hours.)

The Justice Department, along with the attorneys general of six states and the District of Columbia, filed a lawsuit on Tuesday seeking to block the proposed merger of American Airlines and US Airways.

Dealing an unexpected blow to a yearlong effort to create the world’s biggest airline, the Justice Department said the merger between the two airlines would substantially reduce competition, increase air fares and cut service.

After approving a series of mergers between the nation’s airlines in recent years, the Justice Department’s decision came as a surprise to both carriers, who had expressed confidence the deal would go through with only a few changes. Antitrust regulators had not challenged an airline merger since the planned tie-up between United Airlines and US Airways in 2001.

Since then, Delta Air Lines merged with Northwest Airlines, United merged with Continental, and Southwest merged with AirTran.

In recent years, however, consumer groups and some economists have warned that the wave of consolidation in the airline sector had contributed to higher airfares and less choice for consumers.

“Today’s action proves our determination to fight for the best interests of consumers by ensuring robust competition in the marketplace,” said Eric H. Holder Jr., the United States attorney general.

The civil antitrust lawsuit was filed in the United States District Court for the District of Columbia to challenge the planned deal.



Read more: http://dealbook.nytimes.com/2013/08/13/u-s-seeks-to-block-airline-merger/?hp&_r=0

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VERY pleased to see this, about time to see evidence of life in the Antitrust Division of DOJ.

[AndyA]

1. Have big mergers ever worked out well?

There's less competition, and consumers always suffer because of them it seems.

Sirius-XM is just one example--prices went up after the merger, and no competition.

Offhand, I can't think of any big mergers that benefited consumers with lower prices and better service.

[cstanleytech]

2. I guess it depends on how you define "worked out well".

If its worked out well for anyone though its probably been the stockholders but rarely if ever does it work out for us the consumers.
I mean take the ATT merger, prices have gone up and continue to do so but the service is lacking especially for those of us reliant on DSL.

[elleng]

3. I worked regulating major freight rail mergers,

and some of them worked better than others. I did as much as I could (not a whole lot in my 'power') to assure competition would maintain. As haven't been in the business for a number of years I can't really answer, vis a vis the public interest, but the railroads are still providing service, high up among the worlds best. I expect that some are addressing needs of their shippers better than others. Wish I knew more.

[Sen. Walter Sobchak]

5. The problem is somewhere along the way mergers were decided to be better than liquidations

US Airways, United and American all should have gone straight to Chapter 7 and been liquidated in their bankruptcies. But between an extreme reluctance to liquidate large corporations and ego-fueled executives these mergers have created larger and more dysfunctional airlines... but most importantly "too big to fail" airlines.

The biggest problem with these new merged airlines is their debt loads. It won't take much of a downturn to plunge them all back into default. Their aggressive fleet renewals have created unprecedented (in any industry) debt service obligations.

[quadrature]

4. Air Crandall...that zombie needs to be put down..nt

[blkmusclmachine]

6. .

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