AMR, US Airways Settle Merger Litigation

(RTTNews) - AMR Corp. (AAMRQ), the parent of American Airlines, Inc., and US Airways Group, Inc. (LCC) said Tuesday that they have settled the litigation brought by the U.S. Department of Justice, the States of Arizona, Florida, Michigan and Tennessee, the Commonwealths of Pennsylvania and Virginia, and the District of Columbia challenging the merger of the two companies that would create the world's largest airline.

Under the settlement, the airlines will divest 52 slot pairs at Washington Reagan National Airport and 17 slot pairs at New York LaGuardia Airport, as well as certain gates and related facilities to support service at those airports.

The airlines will also divest two gates and related support facilities at each of Boston Logan International Airport, Chicago O'Hare International Airport, Dallas Love Field, Los Angeles International Airport, and Miami International Airport. The divestitures will take place through a Justice Department approved process following the completion of the merger.

The companies also announced an agreement with the U.S. Department of Transportation related to small community service from Washington Reagan National Airport.

AMR and US Airways now expect to complete the merger in December.

In August, the Justice Department, along with six state attorneys general and the District of Columbia, had filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia against the proposed merger of AMR and US Airways, claiming the deal would jeopardize competition and inflate airfares. The antitrust trial was scheduled to begin on November 25. In mid-February, AMR and U.S. Airways agreed to merge in a stock-swap deal to create a global carrier that would have an implied combined equity value of about $11 billion. The deal was originally expected to close in August.

US Airways shareholders will own 28% of the combined company, while the remaining stake will be held by stakeholders of AMR and its debtor subsidiaries.

The merged entity will operate under the American Airlines name and offer more than 6,700 daily flights to 336 destinations in 56 countries.

Tom Horton, chairman, president and CEO of AMR, will be chairman of the board of the combined company, while Doug Parker, chairman and CEO of US Airways, will be the CEO of the combined airline.

The two airlines had obtained European Union approval for the deal in August after agreeing to surrender slots at London's Heathrow and Philadelphia in the U.S.

AMR had filed for bankruptcy protection in November 2011 amid escalating costs. In September, a federal judge of the U.S. Bankruptcy Court in Manhattan approved the company's plan to exit bankruptcy through a merger with US Airways. The DoJ's antitrust lawsuit was the final barrier for AMR to close the merger deal and exit bankruptcy.

US Airways shares closed Tuesday's regular trading session at $23.52, up 25 cents or 1.07%, and gained an additional 18 cents in after hours trading.