European authorities have cleared US Airways Group Inc.'s proposed merger with American Airlines' parent company, AMR Corp. -- on the condition that they give up one slot at London's Heathrow airport and take steps to foster competition on the London-Philadelphia route.
The merger and restructuring plan, which would create the world's biggest airline, must still be approved by a U.S. federal judge before AMR can emerge from bankruptcy, with a hearing expected Aug. 15.
Meanwhile, the U.S. Department of Justice is still reviewing the deal amid complaints that it could lead to reduced competition and higher fares in the U.S.
Joaquin Almunia, the top competition official at the European Commission, the EU's executive branch, said in a statement that the Philadelphia route would have been monopolized without concessions agreed to provisionally by the two airlines.
"On all other transatlantic routes affected by the merger the combined entity will continue to face competition from other strong competitors," including groups led by Delta, United, and Virgin, he said.
European approval for the deal has long been expected, but in the U.S. the situation may be more complicated, despite approval for the deal last week by US Airways shareholders.
In addition to the Justice Department, a number of states have asked for insight into the deal's details, presumably to ensure that hubs and routes touching their regional interests are being preserved.
The companies have said they expect to close the deal by the end of September.