The Department of Justice said Tuesday that it will require US Airways and AMR to divest facilities at seven airports in order for their proposed merger to proceed.
In a release, the DoJ said the airlines would divest slots, gates and ground facilities from LaGuardia, Reagan National, Boston Logan, Chicago O'Hare, LAX, Dallas Love Field and Miami International airports.
Shares in US Airways were halted earlier Tuesday, after early reports saying that the two airlines were close to settling a state and federal antitrust suit.
USAir shares were up 3.4 percent before the halt but fell 1.9 percent after resuming. Shares in AMR, which has continued to trade despite its bankruptcy, rose 33 percent.
Other airline shares rose sharply as well on the news.
The government filed a lawsuit in August arguing that US Airways and AMR Corp, parent of bankrupt American Airlines, should be forced to scrap their proposed merger, which would create the world's largest airline.
—By CNBC's David Faber. Follow him on Twitter @davidfaber. Reuters contributed to this report.