WASHINGTON Feb 26 Executives from American
Airlines and US Airways Group Inc on Tuesday
faced gentle questions from lawmakers about their planned
merger, with some expressing concern about losing hubs in their
US Airways Executive Vice President Stephen Johnson and
American Airlines General Counsel Gary Kennedy defended the
proposed $11 billion transaction by saying the companies had
largely complementary networks, so little competition would be
The Justice Department's Antitrust Division will review the
deal to ensure it complies with antitrust law. Congress has no
formal role in that process.
The executives faced few questions on what has been the
primary concern about the merger - whether the deal would mean
higher prices for the flying public.
Representative John Conyers, a Michigan Democrat, though,
said he was concerned a reduced number of airlines would leave
them room to control the market.
And he asked if the deal was really needed to compete, as
the companies said. "While American is still in bankruptcy, it
is poised to successfully reorganize. Moreover, US Airways
posted record profits. This suggests that both airlines are
perfectly capable of surviving, even thriving, as stand-alone
airlines," he said.
Representative Thomas Marino, a Pennsylvania Republican,
asked Johnson and Kennedy if they planned to raise prices. US
Airways' Johnson said they would not go up but that he did not
know if they would go down.
Pressed on what would happen to prices in the first six
months to a year after the deal closed, American's Kennedy said:
"We don't know. The airline industry is a very competitive
industry with very thin margins."
Several of the lawmakers used the hearing to either pitch a
local area as an airline hub or defend their city's value as an
US Airways has three hubs - Charlotte, North Carolina,
Philadelphia and Phoenix; American has five - New York, Los
Angeles, Chicago, Dallas and Miami.
Representative Steven Cohen, a Tennessee Democrat, lamented
the loss of Memphis as a hub after Delta merged with Northwest,
noting a sharply pared flight schedule and job losses.
Representative Keith Rothfus, a Republican from Pennsylvania,
noted similar woes after US Airways cut Pittsburgh as a hub.
Representative Luis Garcia, a Florida Democrat, asked for
reassurances that Miami would remain a hub, while Representative
Blake Farenthold, a Texas Republican, noted the large number of
hubs and asked: "What assurance can you give us that you're not
going to shut one of those babies down?"
American's Kennedy replied, "We have a high level of
confidence that the hubs that we have today will remain in
If approved, the deal would be the third major U.S. airline
merger since 2008.
Kennedy said the transaction had been endorsed by labor
unions and the boards of both companies and would give them
badly needed financial stability.
Both executives cited the Delta deal to buy
Northwest in 2008 and the United purchase of Continental
in 2010, saying that consumers wanted to fly one airline to
their destination, not several, and that this preference
hampered smaller carriers.
The new company, to be called American Airlines, would
become the largest U.S. air carrier, with 23 percent of
available seats. That compares with Delta at 20 percent, United
at 18 percent and Southwest at 18 percent, Johnson said in his
Lawmakers from a Senate Judiciary subcommittee will hold a
hearing on March 19. The witness list for that has not yet been