In 2013, the Antitrust section of the Department of Justice shocked many in the airline business by filing a lawsuit to block the merger of American Airlines and US Airways on the basis that the merger/acquisition would kill competition. The two airlines had announced their intent to unite in February, making way for the creation of the largest airline in the world. The new airline would carry roughly 200 million passengers per year, employ more than 100,000 workers, and have total revenues of nearly $40 billion. The American Airlines-US Airways merger was merely the latest, albeit the biggest, in a recent spate of airline mergers. During the first ten years of the 21st century, the airline business had been affected by economic recession, high fuel costs, record losses and bankruptcies. Beginning in the mid-2000s, airline executives responded with an aggressive plan of consolidation. Mega deals, such as the amalgamation of Delta and Northwest (in 2008),) United and Continental (2010), and Southwest and AirTran (2011) had drastically reshaped the business. Part A of this case summarizes the historical ups and downs of the volatile US airline business, the concerns raised by the DOJ and the responses of American Airlines and US Airways, and asks students to consider the evidence and determine if the edges of combining the two airlines outweigh the potential harm to consumers. The case sequel describes how the DOJ finally settled the lawsuit with airlines, after American agreed to disown gates and slots at numerous airports in 2013.
This is just an excerpt. This case is about GLOBAL BUSINESS
PUBLICATION DATE: August 13, 2015 PRODUCT #: KS1140-PDF-ENG
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