WASHINGTON Feb 25 The merger of American
Airlines and US Airways Group Inc would
allow the companies to combine complementary networks, preserve
competition and save $1 billion, executives from the airlines
will tell lawmakers on Tuesday.
An expert on the airline industry will also testify and say
that the deal may well harm consumers.
In testimony released in advance of a hearing before a
subcommittee of the House of Representatives' Judiciary
Committee, US Airways Executive Vice President Stephen Johnson
and American Airlines General Counsel Gary Kennedy defended the
proposed $11 billion transaction.
The Justice Department's Antitrust Division will review the
deal to ensure it complies with antitrust law.
Experts have said that the agency is likely to ask for
divestitures in US Airways' hub at Washington's Reagan National
and Charlotte, N.C., and AMR's hub in Dallas.
If approved, it would be the third major U.S. airline merger
Kennedy noted that the transaction had been endorsed by
labor unions and the boards of both companies and would create
"a degree of financial stability that we have not experienced in
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 hampered smaller
"Because of the limited size and scope of their respective
networks, neither American Airlines nor US Airways is able to
respond fully to that demand and both operate at a competitive
disadvantage to the larger networks of Delta Air Lines and
United Airlines," said Johnson.
The two airlines networks complement each other more than
they compete with each other, both men argued in their
While the new company - which would be called American
Airlines - will become the largest U.S. air carrier, it will
have just 23 percent of available seats, compared to Delta at 20
percent, United at 18 percent and Southwest at 18 percent,
Johnson said in his written testimony.
He also argued that competition in the airline industry is
intense, taking issue with those who fear it is becoming too
"The new American Airlines will also compete against a host
of smaller but lower cost airlines, including JetBlue, Spirit,
Alaska, Frontier, Allegiant and Virgin America," Johnson said in
A third witness on Tuesday, Kevin Mitchell, chairman of the
Business Travel Coalition, was skeptical of the companies'
efficiency claims, particularly that they would give consumers
better service and save money.
"It is important to note that high profits may indicate any
number of developments. One is that carriers have in fact
realized claimed efficiencies," said Mitchell, according to the
testimony released ahead of the hearing.
Another explanation, he said, was that the profits came from
the companies' dominance of the market or from hampering
consumers' efforts to effectively price shop.
Mitchell took issue with the merger as being good for
consumers: "From a consumer standpoint - individual traveler or
corporate travel department - there are few benefits to offset
the negative impacts of this proposed merger that include
reduced competition, higher fares and fees and diminished
service to small and mid-size communities."
Johnson said he expected the transaction to close in the
Lawmakers from the Senate Judiciary subcommittee have also
announced plans for a hearing on the proposed merger, with no
date set so far.