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Development & Transportation

Proposed Settlement Would Allow US Airways-American Merger

The Justice Department says it has reached an agreement permitting the $11 billion merger of American Airlines and US Airways, creating the world's biggest airline.

In August, the federal government, along with Pennsylvania and five other states, sued to block the merger, claiming it would restrict competition and drive up prices for consumers on hundreds of routes around the country.

The airlines have said their deal would increase competition by creating another big competitor to United Airlines and Delta Air Lines, which grew through recent mergers.

Allegheny County Executive Rich Fitzgerald says he has "mixed" feelings about the proposed settlement.

"The good news is that we're going  to maintain the routes that we have and the destinations with US Airways and American for at least five years, and most likely we're going to add to that just because of the growth and good things that are happening here in southwestern Pennsylvania," he said. "The bad news is we couldn't get any guarantees on the maintenance facility and operations center."

According to a filing in March with the Securities and Exchange Commission, Doug Parker, the chairman of US Airways and would be CEO of the merged airline, told US Airways employees that the consolidated airline won’t need two operations control centers, and if he “had to bet right now,” the Moon Township facility would be the one to close and jobs “would move to Dallas.”

The operations center employs 150 workers and the heavy maintenance facility about 700.

"We want to work with the new airline and to make the case that this is a good operation, it's efficient, one of the most efficient you could ever have," Fitzgerald said. "We want to do whatever we can to preserve those jobs."

Fitzgerald says the Pittsburgh area was fortunate in this settlement because"we didn't really have a lot of leverage."

The guarantee on base line flights for five years means a lot to this region, according to  Brad Penrod, president of the Allegheny County Airport Authority.

“The five-year projections on job growth and expansion for this area, as well as the fact that the airport debt will be paid off in that time frame, puts the Pittsburgh International Airport in a very good place to be able to further grow our airport and the flights we offer,” he said.

The settlement reached Tuesday would require approval by a federal judge in Washington and eliminate the need for a trial that had been set to begin Nov. 25. It would require American and US Airways to give up takeoff and landing rights or slots at Reagan National and New York's LaGuardia Airport and gates at airports in Boston, Chicago, Los Angeles, Dallas and Miami to low-cost carriers.

Attorney General Eric Holder said the agreement would ensure more competition on nonstop and connecting routes throughout the country. The department said the divestitures were the largest ever for an airline merger.

The companies expect to complete the merger in December.