Parker told Reuters in an interview on Wednesday that US Airways is working with legal advisers and has had preliminary discussions with officials of the Justice Department’s antitrust division and with congressional lawmakers and staff.

Parker does not believe a deal with American would raise competition concerns, a view shared by a number of antitrust experts who said the Justice Department has approved three notable mergers with little or no pushback since 2008.

Parker sees the industry mega-mergers that created the new Delta Air Lines in 2008 and the new United Airlines two years later as an advantage to any review of a proposed American tie up because those two airlines, he said, are stronger.

American has grudgingly responded to pressure from creditors to consider a tie-up with smaller US Airways as its best option for competing with Delta and United.

But the airline has made it clear that it would prefer to emerge from Chapter 11 protection as a standalone carrier and is seeking bankruptcy court permission to formulate a reorganization plan without interference from outside parties through the end of the year.

Parker said the airline has had a number of conversations with lawmakers without any material objections to the possibility of American and US Airways forming the world’s biggest airline.

“We are letting people know what’s going on because we know that when mergers in our business get brought up, people start getting concerned,” Parker said.

Leaders of American’s big unions have accompanied US Airways on Capitol Hill visits, an unusual alliance in any merger process that Parker said is a plus for easing any concern lawmakers may have about workers affected by a merger.

Justice Department officials declined to comment.

Any American-US Airways transaction would likely win approval regardless of which party, Democrat or Republican, is running the Justice Department next year, several sources with knowledge of antitrust policy said.

“I don’t see a big problem here because you have a consolidating industry that’s not making any money. So I think this deal might make some sense,” said Evan Stewart, an antitrust attorney with Zuckerman Spaeder LLP.

Parker also said he did not anticipate the presidential election influencing the timing of any merger proposal.

Sources familiar with US Airways’ thinking envision the new airline would adopt the American name and become a force in the East and Midwest, hubs for premium-paying business customers with a substantial domestic and international network.

US Airways has negotiated shadow contracts with American’s pilots and other unions, who as unsecured creditors in American’s bankruptcy have pushed for a merger. Parker has also pitched the deal to Wall Street and has expressed a strong preference for it to be done while American is in bankruptcy.

Antitrust experts agreed regulators would approve a deal quickly, arguing the Justice Department would find few overlapping routes, its usual method of assessing airline mergers.

Airlines usually know where the conflicts are and which routes will need to be divested to ensure competition, said George Hay, a veteran of the Justice Department now at Cornell University Law School.

“If it’s (the antitrust review) route specific, it’s going to be pretty easy to fix it,” said Hay.

A combined American and US Airways would control 20 percent of the domestic market-based on a key measure of revenue-that would feed international routes to Europe, Asia and Latin America.

United and Delta, each control about 16 percent of domestic service and both have robust international operations. Delta has 21 percent of the New York share, while United, through its deal with Continental, controls 37 percent of flights from Newark.

Parker argued that a tie-up of American and US Airways would be good for consumers because a third mega carrier would put price pressure on the other two.

(Editing by Carol Bishopric)

Christy Romero, special inspector general for the government’s financial-crisis-era corporate bailout initiative told a congressional committee that it could take a number of years for taxpayers to simply break even on the investments in GM and Ally Financial, formerly known as GMAC.

Romero said in testimony for a subcommittee of the Republican-led House Oversight Committee that previous government audits had raised the prospect that Treasury could sell shares below break-even prices.

“Although that would result in taxpayers getting out of these investments more quickly, it would decrease taxpayer return,” Romero said. “Treasury should develop a concrete exit plan for GM and Ally.”

A Treasury spokesman said it would “continue to balance exiting as soon practicable and maximizing value for taxpayers.”

Treasury, which invested more than $50 billion in GM via the Troubled Asset Relief Program, has not sold any shares since 2010. It would need to sell its remaining stake of 500 million shares at more than $52 each to break even on the bailout.

Taxpayers are expected to recoup more money from the auto bailout than first thought, but will still likely lose billions on the deal.

On Tuesday, GM stock traded just above $20, down sharply from its initial public offering price of $33 in November 2010.

Ally filed its intent in March 2011 to seek a public share offering but has not yet taken that step.

Even if Treasury sells a large amount of its Ally stock in an IPO, it would still take a year or more to dispose of its ownership stake, Romero said, citing a government analysis.

The government injected $17 billion into the lender through multiple bailouts during the financial crisis and now owns about 74 percent of the company.

Taxpayers still hold about 30 percent of GM equity, roughly half of their initial interest coming out of the automaker’s bankruptcy in 2009.

DELPHI PENSIONS

Under pressure from Republican lawmakers, three former Obama administration officials instrumental to the auto rescue agreed on Tuesday to be questioned by Romero and her team about certain union pensions and the bailout after refusing to do so for months.

Romero is looking at whether the White House and Treasury Department pushed GM to shore up certain ailing union pension plans at troubled auto-parts maker Delphi Corp, while nonunion employees had to settle for reduced benefits as a result of the supplier’s bankruptcy.

Republicans have long complained that the government-sponsored bailout and bankruptcy of GM, rival automaker Chrysler and suppliers were at least partly aimed at salvaging union jobs in politically crucial and economically hard-hit Michigan and Ohio.

President Barack Obama has campaigned heavily in those states on a signature economic policy achievement — the revival of U.S. auto manufacturing due to his intervention following its near-collapse soon after he took office.

Organized labor has been a cornerstone Obama constituent and a prime target for Republicans this election season. Some Republicans have accused mainly public-sector unions of sapping municipal budgets with bloated contracts and benefits.

‘TOP UP’ PAYMENT

Unable to meet its obligations, bankrupt Delphi turned over its underfunded pension plans covering some 70,000 workers and retirees in 2009 to government insurers, which would pay out benefits but at rates lower than promised.

GM agreed to add about $1 billion to accounts for 40 percent of the pension recipients, mainly hourly employees and retirees of the United Auto Workers and other smaller unions. The 20,000 nonunion salaried employees were excluded, as were some other union workers.

Investigators had tried without success to interview former Auto Task Force chief Ron Bloom, legal adviser Matthew Feldman, and member Harry Wilson about the Delphi pensions and GM’s decision to “top up” certain plans, Romero said.

The task force disbanded after GM and Chrysler emerged from bankruptcy with taxpayer capital, scaled-back operations and thousands fewer workers.

When asked why they initially refused to cooperate with the special inspector general, Bloom, Feldman and Wilson cited a combination of time constraints and the fact that they did not believe there was anything more to add to the volumes of audits, reports and recorded testimonials.

According to Feldman and a Government Accountability Report presented at the hearing, GM’s decision to “top up” underfunded pension plans stemmed from a 1999 agreement with the United Auto Workers and other unions when Delphi was spun off from the automaker.

Those deals were preserved during GM and Delphi’s bankruptcies.

The auto task force concluded that GM’s decision to honor the agreement was prudent, Feldman said. “We believed doing so would protect” GM and taxpayers’ investment in the company, he said.

Bloom, a former investment banker and union negotiator, said in his testimony that he had helped prepare and deliver responses to “countless inquiries” about watchdog and congressional audits and in investigations of the auto bailout.

Wilson, a former private equity investor, lifelong Republican, and candidate for New York State comptroller in 2010, said the Treasury Department had “provided general input but not specific decisions” about GM’s business.

GM has said the government never pressured it on business decisions. (Additional reporting by Rachelle Younglai; Editing by Lisa Von Ahn and Leslie Adler)

Christy Romero, special inspector general for the
financial-crisis-era corporate bailout initiative known as the
Troubled Asset Relief Program, plans to tell a congressional
committee that it could take a number of years for taxpayers to
simply break even on the investments in GM and Ally Financial.

Romero noted in prepared testimony for a subcommittee of the
Republican-led House Oversight Committee that previous
government audits had raised the prospect that Treasury could
sell shares below break-even prices.

“Although that would result in taxpayers getting out of
these investments more quickly, it would decrease taxpayer
return,” Romero said. “Treasury should develop a concrete exit
plan for GM and Ally.”

Treasury, which has invested more than $50 billion in GM,
has not sold any shares since 2010. It would need to sell its
remaining stake of 500 million shares at more than $52 each to
break even on the bailout.

The stock is trading just above $20, down sharply from its
initial public offering price of $33 in November 2010.

Also known as GMAC, Ally filed its intent in March 2011 to
seek a public share offering but has not yet taken that step.

Even if Treasury sells a large amount of its Ally stock in
an IPO, it would still take a year or more to dispose of its
ownership stake, Romero said, citing a government analysis.

The government injected $17 billion into the lender through
multiple bailouts during the recent financial crisis and now
owns about 74 percent of the company.

Taxpayers still hold about 30 percent of GM equity, roughly
half of their initial interest coming out of the automaker’s
bankruptcy in 2009.

DELPHI PENSIONS

Romero also plans to tell the Oversight panel that former
Obama administration officials had refused to meet with
investigators examining decision making about certain union
pensions and the auto bailout.

Romero is looking at whether the White House and Treasury
Department pushed GM to shore up certain ailing union pension
plans at troubled auto-parts maker Delphi Corp, while
nonunion employees had to settle for reduced benefits as a
result of the supplier’s bankruptcy.

Republicans have long complained that the
government-sponsored bailout and bankruptcy of GM, Chrysler
and suppliers were at least partly aimed at salvaging
union jobs in politically crucial and economically hard-hit
Michigan and Ohio.

President Barack Obama has campaigned heavily in those
states on a signature economic policy achievement – the revival
of U.S. auto manufacturing due to his intervention following its
near-collapse soon after he took office.

Organized labor has been a cornerstone Obama constituent and
a prime target for Republicans this election season. Some
Republicans have accused mainly public-sector unions of sapping
municipal budgets with bloated contracts and benefits.

‘TOP UP’ PAYMENT

Unable to meet its obligations, bankrupt Delphi turned over
its underfunded pension plans covering some 70,000 workers and
retirees in 2009 to government insurers, which would pay out
benefits but at rates lower than promised.

GM agreed to add about $1 billion to accounts for 40 percent
of the pension recipients, mainly hourly employees and retirees
of the United Auto Workers and other smaller unions. The 20,000
nonunion salaried employees were excluded, as were some other
union workers.

Investigators had tried without success to interview former
Auto Task Force chief Ron Bloom, legal adviser Matthew Feldman,
and member Harry Wilson about the Delphi pensions and GM’s
decision to “top up” certain plans, Romero said.

The task force disbanded after GM and Chrysler emerged from
bankruptcy with taxpayer capital, scaled-back operations and
thousands fewer workers.

“Mr. Bloom, Mr. Feldman, and Mr. Wilson played key roles on
the Auto Team, particularly with respect to decisions made
pertaining to GM,” Romero said.

Without their information, investigators do not have
“sufficient facts to determine their role in the Delphi decision
or to make a determination as to whether there was any pressure
on GM in that decision,” she said.

PRUDENT DECISION

All three men were scheduled to testify on Tuesday.

Feldman, a corporate restructuring specialist, said in
written testimony that he had hoped his deposition in Delphi’s
bankruptcy would satisfy any questions from the TARP inspector
general.

He also said he had been in contact with the agency about
follow-up questions when asked to testify before the Oversight
panel.

According to Feldman and a Government Accountability Report
to be presented at the hearing, GM’s decision to “top up”
underfunded pension plans stemmed from a 1999 agreement with the
United Auto Workers and other unions when Delphi was spun off
from the automaker.

Those deals were preserved during GM and Delphi’s
bankruptcies.

The auto task force concluded that GM’s decision to honor
the agreement was prudent, Feldman said. “We believed doing so
would protect” GM and taxpayers’ investment in the company, he
said.

Bloom, a former investment banker and union negotiator, said
in his testimony that he had helped prepare and deliver
responses to “countless inquiries” about watchdog and
congressional audits and in investigations of the auto bailout.

Wilson, a former private equity investor, lifelong
Republican, and candidate for New York State comptroller in
2010, said the Treasury Department had “provided general input
but not specific decisions” about GM’s business.

GM has said the government never pressured it on business
decisions.

“That delay is fine by us – there is certainty no urgency to
merge,” US Airways’ chief executive, Doug Parker, said in a note
to employees on Wednesday.

“American is in bankruptcy and we need to respect the
bankruptcy process, so we are doing just that,” Parker said.

US Airways has not made a formal bid, but would like to do
so as part of American’s exit from Chapter 11 protection from
creditors.

Parker said it seems “highly unlikely” that American will
step out of bankruptcy before year’s end, and speculation about
a US Airways-American tie-up will “continue for at least several
more months.”

American had no immediate comment.

American’s parent, AMR Corp, and its creditors
last week sought permission from a U.S. bankruptcy judge in New
York to extend through December the period during which it can
develop a reorganization plan without outside interference.

It currently has until the end of September to do so, but
would like more time now that it is making progress in
long-stalled contract negotiations with its big unions.

American management reached a tentative deal with pilots
last week and is again talking with flight attendants and
mechanics.

Progress with labor added stability to its court
restructuring and reduced the near-term possibility of a
third-party forcing alternatives on the company and the court.

The airline wants to cut labor costs by more than $1.2
billion annually, most of it from unions that made steep
concessions to keep American out of bankruptcy nearly 10 years
ago.

American says new cost cuts are needed now to help it
compete more fully with rivals that reduced labor and other
expenses in bankruptcy.

American plans to emerge as a stand-alone carrier but has
agreed to explore consolidation. Its unions are pushing for a
deal with US Airways to help bolster American’s domestic and
overseas route network.

American’s chief rivals, United Airlines and Delta
Air Lines, both strengthened their operations through
mergers after bankruptcy.

The current US Airways was formed through a merger with
America West in 2005.

The bill came together this week, as lawmakers calculated
the election-year impact of continued gridlock on measures
affecting jobs, soaring consumer debt, and help for people who
need government underwriting for flood risk to buy a home.

“It has indeed been a very bumpy road to get to this point,”
said John Mica, the Republican chairman of the House
Transportation Committee, who led negotiations on the bill.

“I’m not particularly pleased with some of the twists and
turns,” he said on the House floor on Friday, describing the
difficulties of reaching the deal in the gridlocked Congress.

After months of negotiations, the compromise was reached
just days away from the deadline for an increase in student loan
rates and for a lapse in transportation funding.

Ambitious proposals to shore up U.S. infrastructure gave
way to a deal that basically keeps transportation funding at
current levels.

The blueprint was based on a bipartisan proposal by the
Democratic-led Senate and was supported by the Obama
administration. President Barack Obama was expected to quickly
sign the bill into law.

Two influential conservative groups – Heritage Action for
America and Club for Growth – said the programs were too
expensive and urged lawmakers to vote against the bill.

The federal government spends more than $50 billion annually
on road, bridge and transit construction projects. The last
transportation bill expired in 2009 and construction programs
have survived since through a series of short-term funding
extensions. The current one ends on Saturday.

STUDENT LOANS, FLOOD INSURANCE

The package also prevents federal student loan interest
rates from doubling to 6.8 percent on July 1 in a one-year, $6
billion deal.

The bill also extend funding for the National Flood
Insurance Program to September 30, 2017. It had been set to
expire at the end of July, in the middle of hurricane season.

The flood insurance program took on a massive debt load
during Hurricane Katrina in 2005, and has been kept alive
through repeated short-term extensions as lawmakers struggle
with reforms.

Federal law requires that homes in designated flood-risk
areas have flood insurance before a mortgage can be completed.
Because the NFIP is effectively the only flood insurance
available in the United States, a lapse in the program would
mean home sales could not close in designated flood areas.

The House and Senate were set to consider the measure on
Friday, one day before temporary funding for highway, bridge and
transit projects was to expire and three days before an increase
in federal student loan rates was set to take effect.

“We have a number of issues we’re trying to work through,”
Senate Majority Leader Harry Reid said, expressing
disappointment that Congress would not act on the legislation
Thursday night. “That’s the way it is.”

Congress took more than two years to reach a transportation
bill covering millions of construction jobs, and did so only
because the potential consequences of inaction in a shaky
economy proved too risky in an election year.

Ambitious proposals to shore up U.S. infrastructure gave way
to a bill that basically keeps transportation funding at current
levels. The blueprint was based on a bipartisan proposal by the
Democratic-led Senate that is supported by the Obama
administration.

The federal government spends more than $50 billion annually
on road, bridge and transit construction projects. The measure
heading for approval, barring an unforeseen development, would
cover spending for a little more than two years.

The last transportation bill expired in 2009 and
construction programs have survived since then through a series
of short-term funding extensions. The current extension ends on
Saturday.

One of the most liberal senators worked with one of the most
conservative to convince other lawmakers to accept the deal,
defying analysts who had predicted Congress in an overheated
political climate would again settle for a short-term funding
option rather than a longer-term bill.

“This agreement provides stability and flexibility for the
nation’s transportation planners,” Democratic Senator Barbara
Boxer, who chaired the negotiations, said in a statement.

Senator James Inhofe, the top Republican on the Environment
and Public Works Committee, has been credited with working with
fiscally conservative House Republicans to find common ground.

“As with any compromise, we didn’t get everything we wanted,
but I believe we truly have a good bill – one conservatives can
be proud to support,” Inhofe said.

The resolution was praised by business groups like the U.S.
Chamber of Commerce. But environmental interests were unhappy
that Republicans won some concessions on environmental reviews
of highway projects.

STUDENT LOANS, FLOOD INSURANCE

The proposal also includes a one-year, $6 billion fix to
prevent a doubling of interest rates on federal student loans to
6.8 percent on July 1, a jump that would have added costs for
many already pinched by steadily increasing education expenses.

Student loans for 7.4 million people cover the largest
component of household debt after mortgages. They rose 3.4
percent to $904 billion in the first quarter of this year,
compared with the final three months of 2011, the New York
Federal Reserve Bank said in a recent report.

Finally, the bill would extend funding for the National
Flood Insurance Program to September 30, 2017. It had been set
to expire at the end of July, in the middle of hurricane season.

The flood insurance program has been a political football in
Washington for years, particularly because of the unsustainable
debt load it took on in the wake of Hurricane Katrina in 2005.

Like the transportation law, the program has remained in
business through repeated short-term extensions.

Federal law requires that homes in designated flood-risk
areas have flood insurance before a mortgage can be completed.
Because the floor insurance program is effectively the only
flood insurance available in the United States, a lapse in the
program means home sales can not close in designated flood
areas.

Jettisoned in the final days of talks was a politically
charged plan pushed by House Republicans to defy President
Barack Obama and move ahead with the Keystone XL oil pipeline,
which would run from Canada to Texas.

The agreement came just days before federal funding for transportation programs is set to expire, and ahead of a hike in interest rates on federal loans for college students.

The Senate could vote as early as Thursday on the 599-page bill, an aide said, while the House of Representatives is expected to vote on Friday.

The bill would extend funding for the National Flood Insurance Program to September 30, 2017. It had been set to expire at the end of July.

It also includes a one-year, $6 billion fix to prevent a doubling of interest rates on federal student loans.

Congress took more than two years to reach the point of finalizing a transportation bill, and only because the potential consequences of inaction proved too risky in an election year.

The bipartisan blueprint was largely crafted by the Democratic-led Senate and was in line with White House expectations.

One of the most liberal senators worked with one of the most conservative to convince other lawmakers to accept the deal, defying analysts who had predicted a short-term extension rather than a longer-term deal given the overheated political climate.

“This agreement provides stability and flexibility for the nation’s transportation planners,” said Democratic Senator Barbara Boxer, who chaired the negotiations, in a statement.

Senator James Inhofe, the top Republican on the Environment and Public Works Committee, has been credited with working with fiscally conservative House Republicans to find common ground.

“As with any compromise we didn’t get everything we wanted, but I believe we truly have a good bill – one conservatives can be proud to support,” Inhofe said.

The resolution was praised by business groups like the U.S. Chamber of Commerce. But environmental groups were unhappy that Republicans won some concessions on environmental reviews of highway projects.

Jettisoned in the final days of talks was a politically charged plan pushed by House Republicans to defy President Barack Obama and move ahead with the Keystone XL oil pipeline, which would run from Canada to Texas.

Republicans also lost out on another proposal that would have eased proposed environmental regulations on coal ash, a byproduct used in the construction industry.

In the past, there was less partisan fighting over highway funding because of the jobs associated with construction, and the practice of “earmarking,” which guaranteed funding to projects requested by individual lawmakers.

Earmarks were banned last year, and highway funding fell victim to ferocious politics and shifting powers and allegiances in Congress.

Transportation leaders were at times convinced the gridlocked Congress was too divided to pass such a big bill without sweeteners so individual members could claim credit for infrastructure improvements in their states.

Their priorities in the end were to simply maintain current funding and give states some certainty about the financial commitment from Washington. States rely on federal transportation dollars to help them plan and carry out projects, especially road repairs.

(Additional reporting by Richard Cowan; Editing by Fred Barbash and Paul Simao)

The Federal Aviation Administration FAA.L said the early afternoon EDT.L fire at its technical center in Atlantic City knocked out servers and left some automated systems used to efficiently communicate the status of airport ground operations temporarily unavailable.

With digital information unavailable, airlines could not plan and track their flights as quickly as they normally would at the start of another busy summer weekend for travelers, especially in and out of New York, the world’s busiest air space.

The FAA said its ability to direct flights in the air was unaffected and backup data kicked in and offered some relief for affected operations.

But the agency’s sprawling command center outside of Washington mainly had to coordinate airport conditions with other agency facilities and airlines via telephone, which maintained safe operations but slowed communications for thousands of flights.

On a clear day, the FAA outage probably would have been less apparent with airport conditions more predictable. But heavy thunderstorms prompted the FAA to ground or delay flights in New York temporarily for safety, leading to changes in airport operations.

Any major delay in New York will affect flights elsewhere, especially in other East Coast cities.

Delta Air Lines (DAL.N: Quote, Profile, Research, Stock Buzz) alone canceled 300 flights. United Airlines (UAL.N: Quote, Profile, Research, Stock Buzz), American Airlines, US Airways (LCC.N: Quote, Profile, Research, Stock Buzz) and JetBlue Airways (JBLU.O: Quote, Profile, Research, Stock Buzz) canceled large numbers of flights as well.

The explosion and fire that witnesses said generated towering flames forced evacuation of the FAA center and also interrupted the agency’s Internet, including its www.fly.faa.gov website and emails.

Atlantic City’s airport adjacent to the fire-damaged facility closed temporarily, State Police said.

The cause of the fire was under investigation and FAA data systems were not fully operational as of Friday night.

Before the fire, all three big New York-area airports halted traffic for a time while storms passed through the area, setting in motion a ripple effect of service problems throughout the day that would worsen after the FAA fire, airlines said.

Bad weather also affected flights in San Francisco.

United told passengers that weather and FAA-related flight delays and cancellations would continue into Saturday at New York-area airports, Philadelphia and Washington.

Delta canceled 300 flights, while JetBlue Airways said it canceled nearly 70. US Airways reported 46 mainline and more than 200 Express flight cancellations. All three blamed weather and the FAA outage.

American Airlines advised passengers via Twitter of long waits in the Northeast due to the FAA glitch and storms, which generally are the primary reason for delays and cancellations industry wide.

“We appreciate your patience,” American tweeted to its passengers. (Reporting By John Crawley; Additional reporting by Karen Jacobs; Editing by Paul Simao)

The Federal Aviation Administration (FAA) said the early
afternoon (EDT) fire at its technical center in Atlantic City
knocked out servers and left some automated systems used to
efficiently communicate the status of airport ground operations
temporarily unavailable.

With digital information unavailable, airlines could not
plan and track their flights as quickly as they normally would
at the start of another busy summer weekend for travelers,
especially in and out of New York, the world’s busiest air
space.

The FAA said its ability to direct flights in the air was
unaffected and backup data kicked in and offered some relief for
affected operations.

But the agency’s sprawling command center outside of
Washington mainly had to coordinate airport conditions with
other agency facilities and airlines via telephone, which
maintained safe operations but slowed communications for
thousands of flights.

On a clear day, the FAA outage probably would have been less
apparent with airport conditions more predictable. But heavy
thunderstorms prompted the FAA to ground or delay flights in New
York temporarily for safety, leading to changes in airport
operations.

Any major delay in New York will affect flights elsewhere,
especially in other East Coast cities.

Delta Air Lines alone canceled 300 flights. United
Airlines, American Airlines, US Airways and
JetBlue Airways canceled large numbers of flights as
well.

The explosion and fire that witnesses said generated
towering flames forced evacuation of the FAA center and also
interrupted the agency’s Internet, including its www.fly.faa.gov
website and emails.

Atlantic City’s airport adjacent to the fire-damaged
facility closed temporarily, State Police said.

The cause of the fire was under investigation and FAA data
systems were not fully operational as of Friday night.

Before the fire, all three big New York-area airports halted
traffic for a time while storms passed through the area, setting
in motion a ripple effect of service problems throughout the day
that would worsen after the FAA fire, airlines said.

Bad weather also affected flights in San Francisco.

United told passengers that weather and FAA-related flight
delays and cancellations would continue into Saturday at New
York-area airports, Philadelphia and Washington.

Delta canceled 300 flights, while JetBlue Airways said it
canceled nearly 70. US Airways reported 46 mainline and more
than 200 Express flight cancellations. All three blamed weather
and the FAA outage.

American Airlines advised passengers via Twitter of long
waits in the Northeast due to the FAA glitch and storms, which
generally are the primary reason for delays and cancellations
industry wide.

“We appreciate your patience,” American tweeted to its
passengers.

U.S. District Judge Paul Friedman of the District of
Columbia court certified a consolidated case involving eight
shipping companies who claim they were “subjected to an endless
string of rate increases” between 2003-08.

They claim Union Pacific, Norfolk Southern,
CSX Transportation and Burlington Northern Santa Fe
Railway took advantage of a concentrated market, tight capacity
and coordinated pricing.

The four railroads control more than 90 percent of rail
shipments in the United States. They now must defend themselves
in a coordinated civil action by key customers.

“This harmed both the shippers and American consumers,” said
Stephen Neuwirth, an attorney with co-lead counsel Quinn Emanuel
Urquhart & Sullivan.

Overcharge claims have been presented as evidence and are
under seal. But a study by the American Chemistry Council, an
industry trade group, found that surcharges imposed by all major
freight railroads exceeded their fuel cost increases by $6.4
billion between 2003-07.

Shippers using freight rail include major U.S. companies in
the automotive, chemical, agriculture and utility industries.

However, the eight plaintiffs in the class case comprise
large and small businesses, including Olin Corp, an
ammunition and industrial bleach manufacturer, Dakota Granite
Co, and U.S. Magnesium.

Norfolk Southern and BNSF declined comment on Friedman’s
decision.

CSX said in a statement that its fuel surcharge practices
“have always fully complied with the law”.

Union Pacific continued to deny the allegations and called
the claims unfounded.

“While the court decided that the case may continue as a
class action, the court did not find the plaintiffs’ allegations
true,” UP spokesman Tom Lange said.

Union Pacific said it expected to appeal. CSX said it was
reviewing the decision and would soon decide whether to appeal.

Plaintiffs contend that the surcharges had no direct
relationship to actual railroad fuel costs. Surcharges broadly
are designed to recoup costs, not boost the bottom line.

The lawsuits date to 2007 and coincide with so far
unsuccessful Democratic efforts in the U.S. Senate to strip
freight railroads of their antitrust exemption and overhaul the
way they are regulated.

Berkshire Hathaway Inc, whose controlling
shareholder is billionaire investor Warren Buffet, owns BNSF.