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Feds give American Airlines, US Air nod to merge

November 12, 2013 / 1:13 PM EST / CBS/AP

The Justice Department says it has reached an agreement to allow US Airways and American Airlines to complete a $11 billion merger.

The agreement requires the airlines to scale back the size of the merger at airports in Chicago, New York, Washington, Los Angeles and several other big cities.

In a letter to employees, the airlines said that the merged carrier will divest more than 52 landing slot pairs at Ronald Reagan National Airport in Washington and 17 slot pairs at New York's LaGuardia Airport, along with some gates and other facilities at the flight hubs.

American Airlines shares were up more than 19 percent, to $11.34, in early afternoon trade. US Air's stock price fell 1.3 percent to $22.96.

Feds sue to block US Airways, American Airlines merger 02:46

"This agreement has the potential to shift the landscape of the airline industry," said U.S. Attorney General Eric Holder in a statement. "By guaranteeing a bigger foothold for low-cost carriers at key U.S. airports, this settlement ensures airline passengers will see more competition on nonstop and connecting routes throughout the country."

In August, the government sued to block the merger, saying it would restrict competition and drive up prices for consumers on hundreds of routes around the U.S.

The airlines had said their deal would increase competition by creating another big competitor to United Airlines and Delta Air Lines, which grew through recent mergers.

American Airlines remains under federal bankruptcy protection, so the bankruptcy court must approve the deal. That is expected, and the companies said they expect to complete the deal in December.

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