AMR, U.S. Airways merger reaches settlement with Justice Department

Nov. 12 (UPI) -- American Airlines and U.S. Airways reached a settlement with the Justice Department after a months-long antitrust lawsuit, allowing the two to create the world's largest airline.

American Airlines parent company AMR Corp.'s shares rose more than three percent in response to the news. The new deal will bring the company out of bankruptcy this December.

The deal will also have AMR Corp. open up more than 100 spots at New York's LaGuardia Airport and Washington's Ronald Reagan Airport, along with a number of smaller airports, for competing airlines to utilize.

The Justice Department initially feared the merger would lead to higher fares and unfair competition. But the two companies argued that the merger was necessary to stay competitive in a fast-changing airline industry, and keep up with competitors including Delta and Continental.

The settlement avoids a trial that would have taken place Nov. 25. American CEO said the loss of spots is "modest" and that he's pleased with the settlement.

Attorney General Eric Holder said the deal creates “a bigger foothold for low-cost carriers.”

Slots at LaGuardia will be reserved for Southwest Airlines, and Reagan spots will be reserved for JetBlue. Slots will also be open for competing airlines in Chicago, Dallas, Boston, Los Angeles and Miami. Low-cost airline stocks rose Tuesday.

AMR is reported to be trading at twice the price it was in August when the Justice Department first blocked the merger. It initially filed for bankruptcy nearly two years ago.