Texas AG details opposition to airline merger

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Associated Press

Posted on August 16, 2013 at 3:00 PM

Updated Saturday, Aug 17 at 10:32 AM

DALLAS (AP) — The Texas attorney general says he's suing to block a giant airline merger because comments by company executives show they think consolidation will lead to higher prices.

Texas and five other states joined the U.S. Justice Department in suing this week to block the proposed merger between American Airlines and US Airways.

Texas Attorney General Greg Abbott's opposition is notable because Fort Worth-based American is a major employer in the state, and he's running for governor next year.

Abbott said he challenged the merger because top company executives said in internal emails and other comments that they think the merger and shrinking competition "will allow the airlines to pile even more bag fees, ticket change fees and increased fares on customers."

Abbott said that if American and US Airways merge, they would no longer compete on nearly 200 routes touching Texas. He said based on recent financial results, both are healthy and can compete without merging. The AG made the comments on his official website Friday and in a Dallas Morning News guest column.

The Justice Department cited comments such as one by the president of US Airways, who said in 2011 that airlines were able to raise prices several times because of consolidation — mergers that had reduced the number of competing airlines. In 2012, the same executive said consolidation allowed the industry to raise fees on things such as checking bags and changing reservations.

American declined to respond to Abbott's comments Friday, but lawyers for both airlines downplayed the executives' emails and remarks in a conference call with reporters this week.

"The emails have nothing to do with this merger," said Paul Denis, an antitrust lawyer hired by US Airways. "They're all taken from other contexts in the past ... what's relevant to this merger is the marketplace in which it is occurring and the level of competition that will be increased by putting these two companies together."

American and US Airways argue that the merger would actually increase competition by creating a new huge airline to rival United and Delta.

The companies expected to close their merger next month, but now the deal could be delayed several months or even scuttled by the Justice Department's lawsuit. Both the airlines and government officials said that they planned to take the case to trial, but they didn't rule out a negotiated settlement.

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