The merger between American Airlines and US Airways was supposed to cap an era of consolidation that helped the airline industry return to profitability. And it would make American a viable competitor to giants United and Delta.
The government’s lawsuit to block the merger has put both of those expectations in doubt.
Airline investors fear that if American can’t grow by merging, it will add flights, which will lower airfares and drive down profit margins for everybody in the business. That fear prompted a two-day sell-off in airline stocks. By combining with US Airways, American would leave bankruptcy protection as the biggest airline in the world.