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Merger Upset: Who Cares and Why?

As you’ve no doubt seen by now, the Department of Justice (DOJ) announced it plans to oppose the merger between American and US Airways. Once viewed as a certainly, the merger has been relegated back to “maybe” status.  Reactions from key players in the airline industry have tended to follow four basic threads:

    Surprise: No matter what side they’re on, just about everyone was taken by surprise. A typical reaction: “If they allowed Delta-Northwest and Continental-United, how can they possibly disapprove of this one?”
    Approval: Consumer advocates were virtually unanimous in opposing the merger, which they claim would lead to higher fares and fees. They’re delighted to see DOJ step into the deal.
    Disapproval: Industry financial analysts generally favor increased consolidation, not least because it allows the airlines to increase fares and fees.
    Skepticism: Legal folks think that DOJ’s suit will probably not prevail. The Department has been significantly unsuccessful in prior antitrust actions against big airlines, so why should it start winning now?

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