The U.S. Justice Department, joined by the attorneys general of six states, filed a lawsuit to block the merger Tuesday in federal court in Washington, D.C.
The government's challenge threatens to quash a deal that would create the world's largest airline by passenger miles. The airlines could challenge the government in court, or possibly agree to concessions that would convince regulators to approve the merger.
The lawsuit caught many observers by surprise. In the last five years, antitrust regulators had allowed three other major airline mergers to go ahead, leaving five airlines in control of about 80 percent of domestic market. But the government argued that this merger would hurt consumers around the country by eliminating a competitor on more than 1,000 routes.
If the merger leads to even small increases in ticket prices or airline fees, it would cost American consumers hundreds of millions of dollars each year, the department said.
As examples, the government cited round-trip fares for travel this month between Miami and Cincinnati and between Houston and New York in which US Airways' fares are far lower than American and other competitors.
Shares of both airlines plunged on news of the lawsuit. US Airways Group Inc. shares fell $1.66, or 8.8 percent, to $17.16 in midday trading. AMR shares were taken off the New York Stock Exchange shortly after the company filed for bankruptcy protection in late 2011 but still trade over the counter; they were down $2.43, or 41.8 percent, to $3.38.
Neither US Airways Group Inc. nor American Airlines parent AMR Corp. commented immediately on the lawsuit.
Last year, business and leisure travelers spent more than $70 billion on airfare in the United States. Consumer advocates cheered the lawsuit.
"This is the best news that consumers could have possible gotten," said Charlie Leocha, director of the Consumer Travel Alliance and member of a panel that advises the government on travel-consumer issues. He said that recent mergers had led to higher fares and fewer flight choices and this one would have the same result.
The lawsuit will not necessarily stop the deal. The airlines could fight back in court, but it might not even get that far.
Analysts said that the Justice Department, which has been talking to the companies for months, could be seeking more time and leverage to squeeze out some concessions. Many experts had expected regulators to pressure American and US Airways into giving up some takeoff and landing slots at Reagan National Airport, allowing for new competitors at the busy airport, which is just across the Potomac River from downtown Washington.
Even outside the two companies, many in the airline industry had expected that the deal would easily win regulatory approval like Delta's purchase of Northwest, United's combination with Continental, and Southwest' acquisition of AirTran.
Justice Department officials "didn't have any problem with the Northwest-Delta merger; didn't have any problem with United-Continental. Where did they think it was going to go?" said Robert Mann, an airline consultant who once worked at American.
At the least, the lawsuit could delay AMR's exit from bankruptcy and make a merger slightly less likely, said Daniel McKenzie, an analyst for Buckingham Research Group.
AMR and US Airways announced in February that they planned to merge into a carrier with 6,700 daily flights and annual revenue of roughly $40 billion. By passenger traffic, it would slightly eclipse United Airlines and Delta Air Lines. Along with Southwest Airlines, the deal would leave four airlines dominating the U.S. market.
Mergers have helped the industry limit seats, push fares higher and return to profitability. AMR and US Airways officials had said their merger would help consumers by creating a tougher competitor for United and Delta.
AMR has cut labor costs and debt since it filed for bankruptcy protection. Pilots from both airlines have agreed on steps that should make it easier to combine their groups under a single labor contract, a big hurdle in many airline mergers.
A federal bankruptcy judge in New York was scheduled to hold a hearing Thursday to consider approving AMR's reorganization plan - one of the last steps before the merger would be completed. The hearing was expected to go ahead. The merger has been approved overwhelmingly by AMR creditors and shareholders and by US Airways shareholders.
In its lawsuit, the Justice Department was joined by the attorneys general from American's home state of Texas, US Airways' home state of Arizona, plus Florida, Virginia, Pennsylvania, Tennessee and the District of Columbia.
LANCASTER, Ohio (AP) -- Police say an instructor at a central Ohio gun safety class has accidentally shot a student.
The Columbus Dispatch reports 73 year old Terry J. Dunlap Sr. was demonstrating a handgun at a training facility on Saturday when he fired a bullet that ricocheted off a desk and into the right arm of 26 year old Michael Piemonte.
The student says the .38 caliber bullet hit him between his elbow and armpit. He says many of the students in the class were nurses who helped stabilize him before he was transported to a Columbus hospital.
Piemonte tells the newspaper it appears Dunlap didn't know the gun was loaded. Dunlap hasn't responded to requests for comment.
A police report lists the shooting as accidental.
SAN DIEGO (AP) — A close family friend suspected of abducting a 16 year old girl after killing her mother and younger brother fired his rifle at FBI agents before they killed him deep in the Idaho wilderness, authorities said Monday.
Hannah Anderson didn't know her mother and brother were dead until she was rescued from 40 year old James Lee DiMaggio, San Diego County Sheriff Bill Gore said.
"I can't make it any clearer: She was a victim in this case. She was not a willing participant," Gore said at a news conference with Hannah's father, Brett Anderson.
During a shootout with the FBI, DiMaggio fired at least once and perhaps twice, the sheriff said.
Hannah Anderson reunited with family in San Diego to begin what her father said would be a slow recovery. He thanked the horseback riders who reported seeing the pair near an alpine lake, saying the search might have taken much longer without them.
"She has been through a tremendous, horrific ordeal," said Brett Anderson, who declined to answer questions and pleaded for privacy.
Christopher Saincome, Hannah's grandfather, said his son-in-law wanted to take Hannah with him to Tennessee, where he recently moved. Saincome told him that she should stay in the San Diego area, where she was raised and has a large circle of friends.
"I think she needs to be here with friends," Saincome said. "I know she's taking it very tough. One of her best friends is with her, talking to her."
Gore declined to address how Hannah's mother and brother died, describe Hannah's captivity or say whether she tried to escape. The sheriff also refused to discuss the rescue or how many times DiMaggio was shot, other than to say the suspect is believed to have fired first and that Hannah was nearby.
Gore said the crime was "not spur of the moment" but would not elaborate. Sheriff's Capt. Duncan Fraser said last week that investigators believe DiMaggio may have had an "unusual infatuation" with the girl.
DiMaggio is suspected of killing 44 year old Christina Anderson and 8 year old Ethan Anderson and leaving their bodies in his burning home near San Diego on Aug. 4. Hannah's disappearance triggered a massive search in much of the western United States and parts of Canada and Mexico that ended with Saturday's shootout and rescue.
A DiMaggio family friend, Andrew Spanswick, said the suspect appears to have followed in his father's footsteps in a carefully laid plan. His house burned down exactly 15 years after his father disappeared. Saturday's shootout came exactly 15 years after his father committed suicide.
The younger DiMaggio "clearly had a death wish," Spanswick said.
The father, James Everet DiMaggio, was arrested after breaking into the home of his ex-girlfriend in 1988, wearing a ski mask and a carrying a sawed-off shotgun and handcuffs, Spanswick said. The former girlfriend wasn't home, but DiMaggio held her 16 year daughter and her boyfriend at gunpoint. The girl escaped after asking to use the bathroom.
The elder DiMaggio was imprisoned for a separate attack and died in 1998 after consuming a large amount of methamphetamine intravenously and walking into the desert.
The massive search for Hannah Anderson probably would have taken longer if a sharp-eyed retired sheriff and three other horseback riders in the rugged backcountry hadn't seen the pair Wednesday. Gore called it the "key event" in the search.
Mark John, who retired as a Gem County sheriff in 1996, shared his suspicions with the Idaho State Police after encountering DiMaggio and the girl on the trail. That enabled investigators to focus efforts on a specific portion of the Frank Church-River of No Return Wilderness, a roadless 3,600-square-mile preserve in the heart of Idaho.
"They just didn't fit," said John, 71. "He might have been an outdoorsman in California, but he was not an outdoorsman in Idaho. ... Red flags kind of went up."
Initially, it was the lack of openness on the trail and a reluctance to engage in the polite exchange of banter like so many other recreationists John has encountered during horseback excursions.
The riders were puzzled why Anderson and DiMaggio were hiking in the opposite direction of their stated destination, the Salmon River.
But more than anything, it was their gear — or lack of it. Neither was wearing hiking boots or rain gear. DiMaggio, described as an avid hiker in his home state of California, was toting only a light pack. It even appeared Anderson was wearing pajama bottoms.
The riders had a second encounter Wednesday, this one at the lake as they were getting ready to head back down the trail.
But it wasn't until Thursday afternoon when the Johns returned home and saw the girl's photographs on the news that they made a connection and notified police.
On Friday, police found DiMaggio's car, hidden under brush at a trailhead on the border of the wilderness area. A day later, searchers spotted the pair by air, and two FBI hostage teams moved in on the camp at Morehead Lake, about 8 miles inside the wilderness border and 40 miles east of the central Idaho town of Cascade.
Rescue teams were dropped by helicopter about 2 1/2 hours away from where Anderson and DiMaggio were spotted by the lake, said FBI spokesman Jason Pack. The team had to hike with up to 100 pounds of tactical gear along a rough trail characterized by steep switchbacks and treacherous footing.
DiMaggio was extraordinarily close to the family, driving Hannah to gymnastics meets and Ethan to football practice.
Dvorak reported from Boise, Idaho. Associated Press writers Julie Watson in San Diego, Tami Abdollah in Los Angeles, and Rebecca Boone in Cascade, Idaho, contributed to this report.