House Panel OKs Bill to Block Airline Buyouts

The House Public Works and Transportation Committee today approved legislation to give the Transportation Department the right to block takeovers of major airlines if safety or competition would be compromised.

The bill cleared the committee by a vote of 23 to 5 despite claims that it could be the first step toward congressional regulation of leveraged buyouts.

“The government doesn’t have a role in determining individual transactions and second-guessing the marketplace,” said Rep. Arlan Stangeland (R-Minn.), calling the bill an impediment to the economics of the airline industry.

The bill would require DOT to block takeovers of major airlines if the acquisition would financially weaken the carrier and lead to a deterioration in safety.

The acquisition of 15% of a carrier’s voting stock also would be blocked if it would lead to the sale of a substantial portion of assets or jeopardize its ability to compete. The takeover could not go through if control went to a foreign interest. The bill applies to airlines worth at least $750 million.

The bill, which is similar to legislation approved by the Senate Commerce, Science and Transportation Committee, had been rushed through Congress because of concerns about Donald J. Trump’s attempts to take over AMR Corp., parent company of American Airlines Inc.

Trump, a New York billionaire, withdrew his $7.5-billion bid on Monday, hours before a House aviation subcommittee passed the legislation but he said he may make another bid for the country’s largest airline.