US Airways, American Airlines Reach Settlement With Government

In a deal that could have large ramifications for the Caribbean, the United States Department of Justice filed a proposed settlement with US Airways and American Airlines’ parent company AMR Corporation on Tuesday.

The proposed settlement, which still requires court approval, paves the way for the merger between the two aviation giants.

The deal would see the carriers divest 104 slots at Reagan National Airport in Washington, DC, 34 at LaGuardia in New York and two gates and ground facilities at airports including Boston, O’Hare in Chicago, LAX in Los Angeles, Dallas Love Field and, most importantly for the Caribbean, at Miami International Airport.

“This is an important day for our customers, our people and our financial stakeholders — this agreement allows us to take the final steps in creating the new American Airlines,” AMR CEO Tom Horton said in a release. “With a renewed spirit, we are about to create the world’s leading airline that will offer, along with our oneworld® partners, a comprehensive global network and service by the best people in the business. There is much more work ahead of us but we’re energized by the challenge and look forward to competing vigorously in the ever-changing global marketplace”

American Airlines said that, despite the divestitures, the company expected to generate “more than $1 billion in annual net synergies beginning in 2015.”

American Airlines has more flights to the Caribbean than any other carrier, while US Airways flies to 17 destinations in the region.

Baer said the move would help low-cost carriers achieve lower barriers to entry, which would “offer increased competition, not just on direct flights to and from these key airports, but also on connecting flights nationwide.”

“This is a game changer,” said Assistant Attorney General Bill Baer, who delivered remarks Tuesday in a conference call following the announcement of the settlement. “this agreement has the potential to shift the landscape of the airline industry As you know, we filed a lawsuit to block this merger out of concerns about the potential reduction in competition for air travel throughout the country.  This settlement addresses those concerns and opens up the marketplace as never before.”

The settlement averts what could have been a full-blown trial between the government and the two carriers.

The companies expect to complete the merger in December.