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UPDATE 1-American Airlines merger settlement approved by U.S. judge

(Adds Justice Department statement, paragraphs 3, 4)

April 25 (Reuters) - A federal judge on Friday approved the November settlement between the U.S. government and the airlines that merged to form American Airlines Group, the world's biggest carrier.

U.S. District Judge Colleen Kollar-Kotelly said the settlement, which required American to sell takeoff and landing rights at airports in the New York and Washington areas and airport gates in five other cities, was "within the reaches of the public interest." She said a hearing was not needed.

In Washington, the Justice Department's Antitrust Division welcomed the decision.

"We're pleased that the court agreed that the department's remedy will enhance system-wide competition in the airline industry," head of the Antitrust Division William Baer said in a statement. "History has shown that when low cost carriers have entered the market, consumers benefit."

In August, the U.S. Justice Department sued to block the merger of AMR Corp and US Airways, saying it would hurt consumers by leading to higher airfares. Several states including Arizona and Texas joined the lawsuit, filed in U.S. District Court for the District of Columbia.

American and US Airways reached an agreement settling the lawsuit in November, and the merger was completed in December.

In her opinion, Kollar-Kotelly stated the U.S. government's position that divestitures to low-cost carriers would reduce anti-competitive effects of the merger was "entitled to the Court's deference."

Southwest Airlines and Virgin America acquired takeoff and landing rights, or slots, at New York's LaGuardia and Reagan National near Washington that American sold. JetBlue Airways also gained slots at Reagan National.

The case is United States vs US Airways Group Inc, No. 1:13-cv-01236, U.S. District Court for the District of Columbia.

(Reporting by Karen Jacobs in Atlanta: Additional reporting by Diane Bartz in Washington; Editing by Sandra Maler and)