The US Department of Transportation (DoT) is delaying its investigation into whether the "virtual merger" of Northwest Airlines and Continental Airlines constitutes a transfer of international routes to Northwest.
The DoT gave the airlines a one-year exemption from a new law requiring DoT approval of foreign route transfers. It says the deal may have effectively transferred Continental's routes to Northwest.
It decided, however, to defer action on the route issue pending a ruling on the US Department of Justice's (DoJ) anti-trust lawsuit against the two carriers.
Northwest bought 51% of Continental's voting stock in a move to codeshare and link routes, but they are maintaining separate identities, fleets, management and workforces. Northwest's stake was put into a voting trust.
The DoJ is treating the strategic alliance as a merger that is anti-competitive. The complaint says the voting trust provision does not prevent the harm likely to result from the acquisition. DoJ lawyers believe Continental is now less likely to pursue competitive strategies. The lawsuit could take federal courts years to resolve.
Source: Flight International
