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Merger between two arilines being investigated

An $11 million merger proposed between US Airways and American Airlines is being investigated by 18 state attorneys general. This merger will be investigated regarding its potential effect on consumers. The investigation is required to determine whether this merger would constitute a monopoly of the industry. Monopolies caused by mergers and acquisitions can be harmful because they limit a consumer's choice and decrease competition.

A merger between two major airlines could potentially harm consumers by reducing the number of flights overall to cut costs. The states are also concerned about new routing that might make it more complex to travel. There are 18 state attorneys involved in the investigation of the merger, including Virginia. The merger has been initiated by the bankruptcy restructuring of AMR, a parent corporation of American Airlines.

72 percent of the resulting airline would be owned by creditors and 28 percent would be owned by the current shareholders in US Airways. If the merger goes through, the resulting airline would be considered the largest airline, surpassing the current largest which is United Continental Holdings. However, the merger cannot go through until it passes the antitrust investigation and gets approval from the bankruptcy court.

Mergers and acquisitions can be exceedingly complex. In this case, the merger is between two companies that are already very large, and a merger between the two could result in a monopoly. Commercial law attorneys will be needed to work out the details of the merger and to defend the companies against potential antitrust claims. If the merger is approved by both antitrust investigators and the bankruptcy court, the determination of the actual details of the merger will take a lot of time for the legal teams involved. The restructuring will have to be done to comply both with the needs of the bankruptcy court and the needs of the companies involved.

Source: Herald Net, "States to probe airlines' merger bid", Bloomberg News, July 03, 2013

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