Federal and state officials, including Arizona's attorney general, sued Tuesday to stop the proposed merger between Tempe-based US Airways and the parent company of American Airlines because it would reduce competition.
U.S. Attorney General Eric Holder said the merger would bring "higher airfares, higher fees and fewer choices."
The Justice Department with attorneys general from a half-dozen states in challenging the proposed $11 billion merger between the two. A lawsuit filed in federal court in Washington seeks to block the companies from making the deal.
The merged company would keep the American Airlines name and would be the world's largest airline.
There was no comment from either airline. On Wall Street, shares of both companies have plunged, along with other airline shares.
The Justice Department had been expected to pressure American and US Airways to give up some takeoff and landing slots at Reagan National Airport outside Washington, where a merger would make them the dominant carrier.
Instead, the government is arguing that the merger would hurt consumers around the country by eliminating a competitor on many routes. The department said if the merger brings even small increases in ticket prices or airline fees, it would cost American consumers hundreds of millions of dollars a year.
Under the proposed merger, US Airways' CEO Doug Parker and members of his management team would run the company, moving to American's headquarters in Dallas. About 150 US Airways employees would be relocated, but another 6,000 would keep their jobs in the Phoenix area, business leaders have forecast.