U.S., States Sue to Block Airline Merger

American Airlines and US Airways vowed Tuesday to fight the Justice Department lawsuit that seeks to block their planned merger because of concerns that travelers would pay hundreds of millions more for fares and fees.

 
Investors dumped both stocks after the lawsuit was announced Tuesday morning. US Airways shares were down $2.46, or 13%, for the day, and American was down $2.64, or 45%.
 
The airlines had anticipated merging within months to create the world's largest airline to better compete against United and Delta airlines. But the lawsuit that argues travelers would face hundreds of millions of dollars in higher fares and fees will at least hinder and could block those plans.
 
"While shareholders might benefit, creditors might benefit from consolidation, the fact of the matter is consumers will get the shaft," Bill Baer, assistant attorney general for the antitrust division, told reporters in a conference call. "The right option here is a full-stop injunction."
 
The department argued that the competition — and lower prices — would be lost at more than 1,000 pairs of cities where the airlines compete with connecting flights.