Merger on Hold?

Merger on Hold?

The Federal Department of Justice has been joined by the attorneys general from six states (including Pennsylvania) and Washington DC to stop the proposed merger between USAirways and American Airlines. They have filed suit in Federal court claiming that the merger would create the world’s largest airline resulting in higher fares and less service and competition. This is an unexpected turn of events. Since the two companies had announced their merger plans earlier this year, things had been moving along without turbulence as the plan was approved by each company’s shareholders along with American’s creditors as that airline departs bankruptcy.

So what does this mean for Pittsburgh?

As we had written in a Policy Brief earlier this spring (Volume 13, Number 17), the question for local officials is the fate of USAirways’ flight operations center which was partially funded by taxpayers. If the merger goes through it will certainly mean that facility would be closed in favor of American’s center in Dallas. But if the lawsuit is successful will it give the facility in Moon a reprieve? This is certainly something to watch as the court takes up this matter.