Cong. Study Criticizes United-US Air Merger

In addition, the combined airline could increase competition in 65 of the largest city-pairs, which serve 2.9 million passengers, and could add flights on 256 small-market routes that saw 759,000 fliers in 1999, the GAO said.

Federal regulators could be near a decision on the merger proposal.

Justice to Weigh in

The Justice Department, with advice from the Transportation Department, is in the process of determining whether it would violate antitrust law. It also is being reviewed by the European Commission, which recently delayed its decision until Jan. 12, and by state attorneys general. US Airways shareholders approved the deal in October.

The Wall Street Journal, cited unidentified sources, reported today that state and federal antitrust enforcers are prepared to challenge the merger, although a final decision has not been made. The newspaper also said the companies recently entered settlement talks with Justice officials and may offer a wider sale of assets than previously planned.

Neither United spokesman Plews, nor Justice Department spokeswoman Gina Talamona, would comment on the status of the government’s review.

Many analysts and observers have said the airlines’ plan to spin off most of US Airways’ routes and assets at Washington’s Reagan National Airport to create the new regional carrier DC Air may not be enough. It is widely believed that, in order to placate regulators, the two airlines may be required to divest significant additional critical routes and assets.

Some believe the competitive problems cannot be fixed.

“There is no amendment to this proposed merger that would make it better,” Oberstar said.

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