David Koenig, writing for Bloomberg News, reported that executives of American Airlines and US Airways told lawmakers Tuesday that combining their companies will benefit consumers by creating a tougher competitor for industry giants United and Delta. Although an American-US Airways merger would create the world's largest airline, the new American would still have less than 25% of the U.S. market, the executives said, according to the Bloomberg report. Asked directly whether prices would go up with fewer airlines left, the executives said they didn't know. Bloomberg related that the executives made the comments at a hearing of a House antitrust law subcommittee. American, owned by AMR Corp., and US Airways Group Inc. announced mid-February that they planned to merge in a deal valued at $11 billion in stock. The new airline would be called American but run by US Airways' CEO Doug Parker. Two opponents of the merger -- and congressmen sympathetic to their views -- said they feared that it would lead to higher prices and less service on routes where American and US Airways now compete, Bloomberg said. They said that American was completing a successful restructuring, US Airways just reported a record profit, and each would do fine on its own. AMR general counsel Gary Kennedy and US Airways executive vice president Stephen Johnson said the companies needed to merge to compete with United Continental Holdings Inc. and Delta Air Lines Inc., each of which grew bigger through recent acquisitions, according to the Bloomberg report. Bloomberg noted that Congress has no formal role in approving the merger -- that's up to antitrust regulators in the U.S. Department of Justice, the federal judge overseeing American's bankruptcy case and company shareholders. Lawmakers used the hearing to detail their positions and, in several cases, to make parochial pitches for additional service at local airports, according to the report. About American Airlines AMR Corp. and its subsidiaries including American Airlines, the third largest airline in the United States, filed for bankruptcy protection (Bankr. S.D.N.Y. Lead Case No. 11-15463) in Manhattan on Nov. 29, 2011, after failing to secure cost-cutting labor agreements. AMR, previously the world's largest airline prior to mergers by other airlines, is the last of the so-called U.S. legacy airlines to seek court protection from creditors. Weil, Gotshal & Manges LLP serves as bankruptcy counsel to the Debtors. Paul Hastings LLP and Debevoise & Plimpton LLP Groom Law Group, Chartered, are on board as special counsel. Rothschild Inc., is the financial advisor. Garden City Group Inc. is the claims and notice agent. Jack Butler, Esq., John Lyons, Esq., Felecia Perlman, Esq., and Jay Goffman, Esq., at Skadden, Arps, Slate, Meagher & Flom LLP serve as counsel to the Official Committee of Unsecured Creditors in AMR's chapter 11 proceedings. Togut, Segal & Segal LLP is the co-counsel for conflicts and other matters; Moelis & Company LLC is the investment banker, and Mesirow Financial Consulting, LLC, is the financial advisor. AMR and US Airways Group, Inc., on Feb. 14, 2013 announced a definitive merger agreement under which the companies will combine to create a premier global carrier, which will have an implied combined equity value of approximately $11 billion. The deal is subject to clearance by U.S. and foreign regulators and by the bankruptcy judge overseeing AMR's bankruptcy case. Bankruptcy Creditors' Service, Inc., publishes AMERICAN AIRLINES BANKRUPTCY NEWS. The newsletter tracks the Chapter 11 proceeding undertaken by AMR Corp. and its affiliates. (http://bankrupt.com/newsstand/ or 215/945-7000).
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