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US Airways, American defend planned merger in court filing

U.S. Airways jets are seen at Reagan National Airport in Washington July 12, 2013. REUTERS/Larry Downing
U.S. Airways jets are seen at Reagan National Airport in Washington July 12, 2013. REUTERS/Larry Downing

By Diane Bartz

WASHINGTON (Reuters) - US Airways defended its proposed merger with American Airlines on Tuesday, arguing that the deal would create $500 million in savings to consumers annually by building a stronger competitor to Delta Air Lines Inc and United Continental.

The Justice Department filed a lawsuit on August 13 to stop the $11 billion deal between US Airways Group and American's parent AMR Corp. The government argues the merger would violate antitrust laws because it would lead to higher airfares and related fees.

In November, a judge will hear the case without a jury and decide whether the merger should go forward.

US Airways, in a filing Tuesday evening, argued that the deal was lawful and should be allowed to go forward. "Conservative estimates place the net benefits to consumers at more than $500 million annually," the company wrote in its 50-page filing.

US Airways accused the Justice Department of ignoring the rise of small, aggressive low-cost carriers such as JetBlue Airways and Spirit Airlines, saying that they, along with Southwest Airlines Co and regional airlines, now carry 40 percent of U.S. air traffic.

"The demonstrable success of low-cost carriers is a market-driven response to consumer demand, but the (Justice Department) complaint inexplicably ignores their profound and permanent effect on industry competition," US Airways said.

American also weighed in, saying that those opposed to the deal were "ignoring the realities of the airline industry."

"This transaction, viewed through the lens of the actual U.S. airline industry today, rather than some idealized vision of the past, does not violate the antitrust laws," American said in its 15-page filing. "The airline industry is intensely competitive today and would remain so after this transaction."

A Justice Department spokeswoman was not available for comment.

In its complaint, the Justice Department focused on Ronald Reagan National Airport, just outside Washington, D.C., where the two companies control a combined 69 percent of takeoff and landing slots. It also listed more than 1,000 routes between two cities where the two airlines dominate the market.

The companies have said that the deal is critical for American Airlines, whose parent, AMR Corp, has been operating under Chapter 11 bankruptcy protection since late 2011.

The case at the U.S. District Court for the District of Columbia is No. 1:13-cv-12346.

(Reporting by Diane Bartz; Editing by Ros Krasny and Lisa Shumaker)

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