UAL Wins European OK for US Airways Purchase
United Airlines parent UAL Corp. won European antitrust approval Friday for its $11.6-billion purchase of US Airways Group Inc., after pledging to give up some takeoff and landing slots in Germany.
The largest airline merger will mostly affect the U.S. by giving United access to US Airways’ north-south routes on the East Coast. But because United has a joint venture on transatlantic routes with Deutsche Lufthansa, United had to eliminate some overlap in flights.
“A substantial barrier to entry or expansion on these routes is the congestion at Frankfurt and Munich airports [in Germany],” the European Commission said.
Both U.S. airlines and Lufthansa make daily trips to several U.S. cities from Munich and Frankfurt. In particular, the commission was concerned about routes that link the hubs of US Airways and Lufthansa in Philadelphia, Pittsburgh and Charlotte, N.C.
To alleviate regulatory concerns, United agreed to make slots available in Germany “that will facilitate the market entry of competing airlines” and give consumers a larger choice, the EU said.
United spokesman Andy Plews declined to provide details of the divestitures beyond those in the EU release.
“We are very pleased with the commission’s affirmation that this merger will preserve competition in the transatlantic marketplace and will deliver the consumer benefits we have outlined,” said UAL Chairman and Chief Executive James Goodwin.
UAL shares fell $1.50 to close at $40.44, while US Airways closed up 25 cents at $44.13, on the NYSE.
US Airways and Lufthansa fly between Philadelphia and Frankfurt seven days a week, and US Airways makes daily Philadelphia-Munich trips. US Airways also flies to Pittsburgh and Charlotte daily from Frankfurt.
The merger faces more antitrust hurdles in the U.S. by the Justice Department and state attorneys general. The airlines say they expect the Justice Department’s review to be finished by April 2.
In an effort to win approval from the Justice Department, United and US Airways agreed this week to sell 20% of US Airways’ assets to American Airlines’ parent AMR Corp., which also is buying Trans World Airlines Inc.
AMR will take a 49% stake in DC Air, a new Washington D.C.-based airline to be created by United’s proposed sale of other US Airways assets. AMR closed down $1.63 at $36.81 on the NYSE.
