AMR Corp. (the parent company of American and American Eagle airlines) and US Airways Group have reached a settlement with the U.S. Department of Justice, which will enable them to merge and create the world’s largest airline.
The proposed deal, which is still to be by a federal court before it can take effect, requires the airlines to sell off dozens of landing slots at airports including Reagan National, La Guardia and O’Hare. The airlines also agreed to maintain service in some small- to medium-sized markets, although most of those requirements expire after three to five years.
The airlines first announced their merger plans in February, but the plans were challenged on anti-trust grounds. The Justice Department said the merger would substantially lessen competition for commercial air travel in the U.S. and would result in higher airfares and less service for passengers.
It’s estimated that the new airline will be worth $11bn, with more than 900 aircraft in its fleet with up to 3,000 flights per day. The combined company will retain the American Airlines name, and will be headquartered in Dallas-Fort Worth with a corporate and operational hub in Phoenix. The deal will generate up to $1 billion per year in profits for the new company, according to the US Airways news release.