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Senator Urges Investigation Into US Air/Delta Deal
POSTED: 10:15 a.m. EDT, January 28,2007

The Democratic head of a US Senate antitrust subcommittee expressed concern on Thursday about US Airways' takeover offer for Delta Air Lines, and urged the Justice Department to closely examine any agreement.

US Airways has proposed a takeover of bankrupt Delta in a deal valued at around USD$9.8 billion. Delta management opposes the plan.

"Irrespective of whether the offer by US Airways results in a proposed merger that is formally reviewed by the department, we do feel it appropriate to underscore our firm expectation that the department will investigate this or any other merger among airlines of all sizes with all due care and vigor," Senator Herb Kohl, a Wisconsin Democrat who is chairman of the Senate Judiciary Committee's antitrust panel, said in a letter.

The letter, addressed to US Attorney General Alberto Gonzales, was also signed by the subcommittee's ranking Republican, Orrin Hatch of Utah.

The two senators said any airline merger review by the Justice Department's antitrust division would set a precedent for future mergers in the airline industry.

Kohl and Hatch said their antitrust subcommittee would pay "significant attention" to any airline merger deals.

"From what we are able to glean from publicly available information, there appears to be even more overlap between the US Airways and Delta route networks," the letter said.

"Their merger would appear to result in a significant increase in concentration -- especially on routes serving smaller communities -- and could adversely affect Delta's hubs, as well as lead to a reduction in capacity and higher overall fares," the letter said.

On Wednesday, the Senate Commerce Committee heard testimony from the chief executives of US Airways and Delta at a hearing on airline mergers. Some lawmakers expressed concern the takeover could lead to cuts in service at smaller cities and more industry consolidation.

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