US Airways and American Airlines to merge as world's biggest airline after easing competition fears

US Airways and American Airlines will be allowed to merge to become the world’s largest airline after they agreed to give low-cost competitors more access to several key US airports, including in New York and Washington.

The agreement, subject to court approval, ends a US Department of Justice lawsuit filed in August. The government opposed the merger of US Airways and AMR parent of bankrupt American Airlines, on the grounds it would hinder competition and lead to higher fares.

Justice officials termed the settlement a major boost to the competitiveness at key major airports, while some analysts said the number of flights affected – only about 112 out of about 6,700 daily flights – indicated the change would be incremental.

The merger, now expected to close in the first half of next month, is central to American’s effort to emerge from a two-year bankruptcy process.

The two airlines agreed to give up 52 pairs of takeoff and landing slots at Reagan National Airport, just outside Washington, and 17 pairs at New York’s LaGuardia Airport, both busy airports with limited capacity.

The Justice Department will select which airlines are eligible to buy slots that the airlines must sell as part of the proposed settlement, according to a source close to the deal who was not authorised to speak publicly.