Transportation Secretary Norman Mineta predicted that the Justice Department will reject the proposed merger of United Airlines and US Airways, according to a report in Wednesday's New York Times. Officials for United and US Airways said, however, that they are still pursuing the merger, while a spokeswoman for the Justice Department said it is still evaluating the proposal. While Mineta and the Transportation Department can make their recommendations, it is the Justice Department that has the final say in the matter.
Susana Leyva, a United spokeswoman, said the proposed merger has drawn increased bipartisan support due to the carrier's commitment to preserve jobs at US Airways and to improve service. United and US Airways announced the proposed merger in May 2000. United offered $4.3 billion in cash and also said it would assume US Airways's debt.A merger would significantly strengthen United's presence in the eastern United States, particularly on north-south routes within that region. That could give freight forwarders more opportunities for one-stop shopping. On the other hand, approval of the United-US Airways merger would undoubtedly spur merger proposals by other carriers such as Delta Air Lines, Continental Airlines and Northwest Airlines. Further consolidation within the industry could lead to lower competition and therefore higher prices, along with less pressure on carriers to improve service.