WASHINGTON — The Justice Department says it has reached an agreement to allow American Airlines and US Airways to merge, creating the world's biggest airline.
The agreement requires the airlines to scale back the size of the merger at Washington's Reagan National Airport and in other big cities.
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 country.
The airlines have said their deal would increase competition by creating another big competitor to United Airlines and Delta Air Lines, which grew through recent mergers.
The settlement reached Tuesday would require approval by a federal judge in Washington and eliminate the need for a trial that had been set to begin Nov. 25. It would require American and US Airways to give up takeoff and landing rights or slots at Reagan National and New York's LaGuardia Airport and gates at airports in Boston, Chicago, Los Angeles, Dallas and Miami to low-cost carriers.
Attorney General Eric Holder said the agreement would ensure more competition on nonstop and connecting routes throughout the country. The department said the divestitures were the largest ever for an airline merger.
The companies expect to complete the merger in December. As soon as the deal closes, the airlines will coordinate prices and schedules as if they were one, but combining the fleets will take months or years, executives said.
Six states had joined the lawsuit to block the merger, fearing the loss of flights and jobs at their airports. The Justice Department said that American and US Airways agreed to maintain for three years the US Airways hubs in Charlotte, Philadelphia and Phoenix and American hubs at Miami, Chicago's O'Hare Airport, New York's John F. Kennedy International Airport and Los Angeles International.