European Regulators Clear US Airways, AMR Corp. Merger

 - August 6, 2013, 9:46 AM

The European Commission approved the proposed merger of US Airways Group and American Airlines parent company AMR Corporation on Tuesday, eliminating one hurdle to the companies’ plan to create the world’s largest airline.

The EC approval requires American Airlines after the merger to relinquish one daily slot pair, or round trip, serving London Heathrow Airport. The condition is intended to “induce entry” of competition on the London-to-Philadelphia route, where US Airways and American Airlines, through the oneworld partnership with British Airways, currently offer the only nonstop flights and would have a monopoly after the merger.

“The Commission could clear this transaction in the first phase given the commitments offered by the parties which address the competition concern we identified on the London-Philadelphia route,” Joaquín Almunia, EC vice president for competition policy, stated in a release. “The commitments include a corresponding slot at London Heathrow as well as far-reaching feeder arrangements to induce entry by a new competitor on the route. We are therefore satisfied that the competitive dynamics will be maintained so as to ensure choice and quality of air services for passengers on this route.”

The commission said its review of the proposed merger “confirmed that on all other transatlantic routes affected by the merger the combined entity will continue to face competition from other strong competitors.”

Announced by the boards of the two airline companies in February, the merger still requires approval by U.S. regulators and a federal judge overseeing the AMR Corporation bankruptcy reorganization. The U.S. Bankruptcy Court for the Southern District of New York has scheduled a hearing on August 15 to consider a reorganization plan approved by AMR shareholders and creditors in July.