PPRuNe Forums - U.S. DOJ Sues to Block UAL-US Airways Deal

Time for some "restructuring" at US Airways, I'm afraid.

Awaiting the Wolfman's next move...
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DOJ Sues to Halt Airline Merger

By Keith L. Alexander
Washington Post Staff Writer

Friday, July 27, 2001; 12:22 PM

The Department of Justice today said it would sue to stop United Airlines $12.3 billion acquisition of US Airways saying the deal would reduce competition and result in higher air fares for businesses and millions of consumers.

The government agency said it expects to file suit to block the merger and expects to be joined by the attorney generals from 12 states including Maryland, California and Pennsylvania.

"If this acquisition were allowed to proceed, millions of consumers – business, government and families – would have little choice but to pay higher fares and accept lower quality air service," said Attorney General John Ashcroft.

The highly anticipated decision now brings into question the future of Arlington-based US Airways and its 46,000 jobs. US Airways executives said the nation's No. 6 airline couldn't survive long term in an increasing competitive environment against major carriers such as American and United and smaller, low-cost airlines such as Southwest.

It would be an uphill battle for the airlines to fight the Justice Department in court to get the deal approved, and the Justice Department issued no recommendations

US Airways stock fell sharply on the news, falling $1.20 a share (almost 7 percent) to $16.95 in the hour after the decision was announced. United Airlines shares were down modestly, falling 10 cents a share to $33.82.