July 02--A lawsuit was filed in federal court in California on Tuesday that seeks to block the merger between American Airlines and US Airways, claiming it would be bad for passengers.
Joseph Alioto, an anti-trust attorney who has challenged other airline mergers, said the proposed deal to create the nation's biggest airline would hurt consumers and drive up ticket prices. Thirty-eight 38 plaintiffs, including four Texas residents, are named in the suit, which was filed against US Airways. American or its parent company, AMR Corp., were not named as defendants since the Fort Worth-based carrier is operating under bankruptcy protection.
"The combination is not going to be good for the business travelers," Alioto said in an interview on Tuesday. "The availability of flights is going to be less, the capacity will be less and prices will be higher."
US Airways spokesman Ed Stewart said the lawsuit is without merit and the carrier expects the merger to close in the third quarter as currently planned.
"As is often the case with high-profile mergers, lawsuits containing baseless allegations such as these are filed and they are successfully defended," Stewart said.
Alioto's firm filed similar suits attempting to stop mergers between Northwest Airlines and Delta Air Lines, United Airlines and Continental Airlines and Southwest Airlines' purchase of AirTran Airways. In the latter case, the court ruled in Southwest's favor and ordered Alioto's firm to pay $67,495.30 in attorneys fees.
Some of the plaintiffs in the US Airways-American Airlines lawsuit also appeared on other lawsuits filed by Alioto.
In the suit against US Airways, Alioto argues that the top three airlines will control more than 80 percent of domestic air travel of the merger with American is approved. And including Southwest, 96 percent of the domestic market would be controlled by four carriers.
"The proposed merger would be the fourth mega-merger in five years in the airline industry," the suit says. "This action is the only remaining avenue available to 'arrest' the march to monopoly power in the airline industry."
The U.S. Department of Justice is currently reviewing the proposed merger between American and US Airways. Texas Attorney General Greg Abbott is leading 19 state attorney generals in investigating the anti-trust issues related to the merger to determine if the deal may lead to cuts in air service and higher fares for consumers.
The shareholders of US Airways are scheduled to vote on the merger at a meeting on July 12 and executives at both airlines expect to close the deal in September.
Andrea Ahles, 817-390-7631 Twitter: @Sky_Talk
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