From the start, airline analysts had been predicting that an antitrust lawsuit would not stop the $11 billion deal to combine US Airways and American Airlines.
They saw the suit, filed in August, as a government negotiating tactic, not a deal-breaker.
Turns out, they were right: On Tuesday, the Justice Department said that rather than go to trial, it has settled the case. The two carriers are now free to combine and create the world's largest airline, but they must make room for low-cost competitors at seven airports.
Both the airline executives and many antitrust experts agreed that all's well that ends well.
"We couldn't be happier with the settlement," US Airways CEO Doug Parker said on a conference call with journalists.
"It's a win for consumers," Boston College Associate Law Professor Brian Quinn said. "The government identified a number of markets where the merger would have eliminated all competition" on many routes once American and US Airways combined.
"Freeing up those slots creates an opportunity for competitors," he said.
In a conference call, Assistant Attorney General Bill Baer said forcing carriers to surrender slots can help consumers. He pointed to Southwest Airlines' entry into Newark Liberty International Airport in 2010. Because United and Continental divested themselves of some prime airport real estate when they merged, Southwest was able to acquire 36 divested slots at Newark. Air fares subsequently fell more than 10 percent on nonstop flights alone, he said.
Under the agreement, consumers will find new travel options at Boston Logan International, Chicago O'Hare International, Dallas Love Field, Los Angeles International, Miami International, New York's LaGuardia and Ronald Reagan Washington National.
"This settlement ensures airline passengers will see more competition on nonstop and connecting routes throughout the country," Attorney General Eric Holder said in a statement.
The settlement puts the merger back on track, pending final approval from the bankruptcy court overseeing the financial reorganization of AMR Corp., the parent company of American Airlines.
The Two-Way
Justice Reaches Deal To Allow American, US Airways Merger