Delta Air Lines Inc. (DAL:US) and United Continental Holdings Inc. (UAL:US) are unlikely to win U.S. approval to get the take-off and landing rights that American Airlines gave up to settle a lawsuit over its merger with US Airways Group Inc. (LCC:US), a Justice Department lawyer said.
Renata Hesse, a senior official in the department’s antitrust division, reiterated today that the proposed settlement, which will allow AMR Corp. (AAMRQ:US)’s American to merge with US Airways, is designed to introduce competition at key airports by low-cost carriers.
“We’re not going to stop people from trying,” Hesse told reporters at a conference in Washington. “But it’s hard for me to see how Delta and United would qualify -- would meet that description.”
The merged airline must give up 104 flight slots at Reagan National Airport in Washington and 34 at New York’s LaGuardia Airport, along with smaller divestitures at five other airports, under the proposed settlement reached with the Justice Department Nov. 12. The agreement must be approved by a federal judge.
The accord positions the airlines to complete their combination in December and bring Fort Worth, Texas-based American out of bankruptcy protection.
Delta said in a statement yesterday that the U.S. should consider “all airlines” in the process of divesting slots. The Atlanta-based carrier said it wants the chance to bid for slots and facilities at Reagan and Dallas Love Field.
Delta said it believed that the Justice Department “should not predetermine what communities will receive service with Reagan National slots or Love Field gates, and that it shouldn’t exclude any airline from the opportunity to bid for them.”
Hesse’s comments echoed remarks that Bill Baer, the head of the antitrust division, made the day the settlement was announced. When asked whether Delta and United are eligible to acquire slots, he called low-cost carriers “a key part of the solution.”
Baer testified at a Senate hearing today that the Justice Department will talk to any carrier that can convince the department that it will compete aggressively with the divested slots and gates.
“We have some concerns about whether the legacy carriers are really going to offer that competitive dynamic,” he said.
The case is U.S. v. US Airways Group Inc., 13-cv-01236, U.S. District Court, District of Columbia (Washington).
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