Justice Dept. Opposes TWA, Ozark Merger

The Justice Department said Tuesday that it is opposed to the planned merger of Trans World Airlines and Ozark Airlines because it would substantially reduce competition in and out of St. Louis, where both airlines have major hubs.

But in its filing with the Department of Transportation, Justice said the proposed consolidation could be approved “conditionally” if the two airlines sold 10 contiguous boarding gates in St. Louis to another carrier. Though the DOT has the final say in such airline mergers, it has generally tried to accommodate the Justice Department even when the two government agencies disagree.

TWA announced in February that it would acquire Ozark Holdings, the parent company that owns the airline, for $224 million. If the transaction is approved, Ozark stockholders would receive $19 per share in cash. Ozark has about 11.8 million shares outstanding.

Compete in 30 Cities

In its filing, Justice said a merger between TWA and almost any airline other than Ozark would raise fewer antitrust problems. It said the two airlines currently provide competitive non-stop service to 30 cities. “This merger would reduce the strength of competition in many of these (cities) from St. Louis,” it said.

“We are saying that these two airlines are very direct competitors on a number of routes to and from St. Louis, and right now it would be very difficult for another airline to enter those markets,” said Craig Conrath, assistant chief of the Justice Department’s transportation, energy and agriculture section, in an interview.

TWA declined to comment on Justice’s opposition.

Observers said that if the merger is ultimately rejected by DOT officials, both airlines would suffer. “It would be tough news for TWA and Ozark,” said Scott J. Drysdale, an airline analyst in the Seattle office of Birr, Wilson & Co., a San Francisco-based brokerage. “TWA is large enough to go it alone. But Ozark does not have the critical market share to survive.”