Pa. joins suit to block merger of American Airlines, USAirways

    Pennsylvania has joined five other states and the U.S. Justice Department in a suit to stop the merger of American Airlines and USAirways.

    Attorney General Kathleen Kane argues that the merger would send prices up for travelers.

    “Competition would be reduced, and the cost of flying would go up,” Kane said. “We know this from past experience, and we know it from our economist’s analysis.”

    Vaugn Cordle, an airline industry analyst with Ionosphere Capital, says some fares could go up but savings from the merger could lower the rates for other routes. Philadelphia, a USAirways hub with more than 400 flights a day, would see an advantage, he said.

    “[The new] American will be a much stronger airline with a much larger global footprint and domestic footprint,” Cordle said. “And that provides more volume of passengers in and out of Philadelphia.”

    Cordle says the smaller USAirways has struggled.

    “They’re profitable today because they beat down labor costs in two different bankruptcies,” he said. “And once those labor costs go back up to anywhere close to market rate, USAir[ways] is in trouble.”

    “We are 100 percent committed to completing the merger of our two great airlines as soon as possible so that we can start to deliver the benefits of the new American to our stakeholders,” USAirways president Doug Parker wrote in a letter to employees.

    He also told employees that the airlines still hope to complete the merger by the end of the year.

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