EU approves air merger, requires London-Phila. competition

European Union regulators have approved the merger of US Airways and American Airlines, conditional on getting a third competitor to fly between Philadelphia and London.

American and US Airways agreed to divest, or sell, a pair of slots (takeoff and landing rights) to a rival to fly between Philadelphia International and London Heathrow Airports, the European Commission said Monday. The commission is the executive branch of the European Union.

Commission vice president Joaquin Almunia said antitrust authorities examined transatlantic routes affected by the merger and only one - London-Philadelphia - presented a monopoly.

That's because British Airways and American have a joint business venture and a financial stake in transatlantic flights.

"On all other transatlantic routes affected by the merger, the combined entity will continue to face competition from other strong competitors," including Delta, Air France, United, and Virgin Atlantic, Almunia said.

The merged carrier, which will be called American, will give up one daily slot pair at Heathrow flown from a U.S. city, such as Chicago or Los Angeles. The new airline would use the arrival and departure times in London to fly to and from Philadelphia.

The service would be in addition to US Airways' once-daily round-trip to London and British Airlines' two daily nonstops. Competition helps stabilize fares.

The European Commission did not name an airline that might fly the route. Observers have suggested it could be a foreign-flag carrier, such as UK-based Virgin Atlantic or German-based Lufthansa.

With the entry of a competitor, the commission said, "we are satisfied that the competitive dynamics will be maintained so as to ensure choice and quality of air services for passengers on this route."

Tom Horton, chairman and CEO of AMR Corp., American's parent company, said, "This represents one of the final milestones on our path to becoming the new American Airlines."

Doug Parker, US Airways CEO and incoming chief executive officer of the combined company, said the new American would benefit customers "by enhancing connectivity within the Oneworld Alliance and creating more options for travel both domestically and internationally."

American's bankruptcy reorganization plan and the merger are expected to be approved by a federal judge Aug. 15. The U.S. Justice Department is also reviewing the deal. The airlines expect the merger to close in September.