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UAL Corp. and US Airways Group Inc. have indefinitely extended the antitrust review of their $11.6 billion merger after government regulators raised further questions about a series of side deals involving rival carrier AMR Corp. The U.S. Department of Justice and the two airlines abandoned an April 2 deadline set late last year and agreed to a 21-day notification period. That means US Airways and UAL, the Chicago-based parent company of United Airlines, can ask Justice for a ruling at any time. After that period expires, Justice would have three weeks to decide whether it wants to challenge the deal. UAL and US Airways dropped the April deadline after it became apparent Justice would not be ready to clear the deal by that date, the companies said in a statement released Tuesday night. When the merger was announced last May, the duo said they expected the merger to close early this year. The airlines were forced to extend the deadline last Friday, when Justice officials asked for more information about AMR’s plans to buy many of Arlington, Va.-based US Airways’ operations at Ronald Reagan Washington National Airport, the companies said. UAL agreed Jan. 10 to sell half of US Airways’ Boston-New York-Washington, D.C. shuttle service to AMR, the Fort Worth, Texas-based parent of American Airlines, for $1.5 billion. AMR has also agreed to buy a 49 percent stake in DC Air, a new regional carrier that would purchase 222 US Airways slots at National Airport. A spokesman for US Airways declined to say which American transactions Justice is concerned about. A UAL spokeswoman would not discuss any aspect of the delay. Several lawmakers and regulators have criticized UAL’s merger plans, saying that they will effectively give United and American control over the U.S. airline industry. If all of the deals — including AMR’s planned purchase of bankrupt Trans World Airlines Inc. — are approved, American and United would control roughly half of the market between them. “This is wonderful news and a strong signal that the Department of Justice is doing just what we asked — taking a hard look at how this proposed merger could limit competition, ratchet up prices and prompt more mergers,” said Rep. Louise Slaughter, D-N.Y., one of the deal’s leading opponents, in a statement. Opposition to the UAL-US Airways deal has been especially fierce over their lock on the Washington, D.C., market. UAL has a hub at Dulles International Airport in suburban Washington, D.C., while US Airways is the dominant carrier at nearby National Airport. Realizing that the Justice Department was unlikely to grant it control over both airports, UAL agreed to side deals with DC Air and American. But some antitrust experts have said such steps are insufficient. Washington, D.C., is a key East Coast market; allowing UAL and AMR to control the region will squeeze other carriers out of other Northeast markets, these experts have said. Questions also have been raised about plans to set up a 20-year joint venture to operate US Airways’ shuttle service. The agreement includes a clause that would let UAL take back AMR’s stake in the shuttle if it does another deal that makes AMR significantly larger than UAL. That means the shuttle would still be considered UAL’s property after the merger, critics have said. Copyright (c)2001 TDD, LLC. All rights reserved.

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