The Justice Department is suing to block the merger of American Airlines and US Airways, it said in a statement today.
The combination of the two carriers, announced in February, would create the world's biggest airline, and bring American Airlines out of bankruptcy.
In its statement, the DOJ said the merger would "substantially lessen competition for commercial air travel in local markets throughout the United States and result in passengers paying higher airfares and receiving less service.
Since the challenge was made public, the stock price of American Airlines' parent company, AMR Corporation, has collapsed nearly 35%.
The suit, filed in the US District Court for the District of Columbia, "seeks to maintain competition in the airline industry." The DOJ is joined by the attorneys general of Texas, Arizona, Florida, Washington DC, Pennsylvania, Tennessee, and Virginia.
Attorney General Eric Holder said that challenging the deal "proves our determination to fight for the best interests of consumers by ensuring robust competition in the marketplace."
In an August 5 statement, American Airlines said the resulting carrier "will become a highly competitive alternative for consumers" that "will offer customers more choices and increased service."
The newly formed mega-carrier would take the name American Airlines, and fly 3,200 daily fights on 900 planes.
European authorities approved the $11 billion merger earlier this month, according to the AP.
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