Texas Atty. Gen. Greg Abbott said he would pull out of the lawsuit to block… (Pat Sullivan / Associated…)
Cross Texas off the list of states that oppose the merger of American Airlines and US Airways.
Texas was one of seven states that had joined the U.S. Department of Justice and the District of Columbia in filing a suit to block the airlines from forming the world's largest carrier.
The lawsuit, which is scheduled for trial starting Nov. 25, says the merger will reduce competition, cut service to smaller cities and lead to higher fares.
But Texas Atty. Gen. Greg Abbott announced he is pulling out of the lawsuit after American Airlines agreed to maintain scheduled daily service to more than 20 Texas airports.
In addition, the agreement provides that Dallas/Fort Worth International Airport will remain a major hub for the combined airline and that the carrier's headquarters will be in the Dallas/Fort Worth area.
"This is an important step forward for American Airlines, for Texas, and for our customers and people of both American and US Airways," said Tom Horton, chairman, president and chief executive of AMR Corp., the parent company of American Airlines.
Airline analysts called the move by Abbott a devastating blow to the Justice Department's efforts to block the merger.
"Justice has effectively now lost its First Officer on the eve of one of its biggest battles ever," Vicki Bryan, a high yield bond analyst at Gimme Credit, an independent research service on corporate bonds, said in a statement. "Texas was arguably the most important ally to Justice in blocking the merger, and AG Abbott had been one of the most controversially vocal in selling Justice's steadfast opposition."
This week, AMR reported $165 million in profit in August -- excluding reorganization and special items -- a new record for the month.
The company also announced plans to hire 1,500 new pilots over the next five years, along with the 1,500 new flight attendants and 1,200 new agents that the carrier has already begun to hire.
Super-cheap airline may be ready for takeoff
Proposed airline merger could prevent fare increases
Bill would require a second cockpit door on commercial aircraft