U.S. government seeks trial to block merger
Aug. 28, 2013, Dallas, Tx. - The U.S. government wants to wait until March for a trial on its lawsuit aimed at blocking the merger of American Airlines and US Airways, a deal that would create the world's biggest airline.
August 28, 2013 By Carey Fredericks
The airlines want to start the trial in November. They had hoped to close the merger next month, but that was before the U.S. Justice Department and six states filed the antitrust case two weeks ago.
The Justice Department said in a court filing Tuesday that given the stakes in the merger, it needs until March 3 to develop evidence and prepare for trial. It accused the airlines of rushing the case.
The lawsuit is the last obstacle preventing American Airlines parent AMR Corp. from closing the merger and emerging from nearly two years of bankruptcy protection.
In a written statement, AMR and US Airways Group Inc. said that the government's request was slow and unreasonable after a Justice Department investigation that they say lasted 16 months. The carriers approached the Justice Department before the deal was publicly announced in February.
"Unnecessary delays also prevent American's financial stakeholders, which includes creditors, shareholders and employees, from realizing the benefits and improved certainty that will come from American's emergence from Chapter 11,'' they said.
The Justice Department said that the airlines shouldn't use the bankruptcy case to justify a quick trial on the antitrust lawsuit. It said that AMR and US Airways knew all along that that an antitrust challenge was possible.
Colleen Kollar-Kotelly, the federal judge in Washington, D.C., who is hearing the case, plans to hold a conference on the trial schedule Friday.
The Justice Department originally sought a Feb. 10 start, but
pushed it back after the judge said she had a long criminal trial
scheduled to begin Jan. 14.
The government argues that the merger will reduce competition and
drive up the cost of travel for consumers. It would leave more than
80 per cent of the U.S. travel market in control of four airlines,
down from five.
On Monday, AMR reported a profit of $292 million for July. Excluding restructuring costs, it was the biggest one-month profit in the company's history, according to CEO Tom Horton. The Justice Department took note of that.
American's restructuring has been "extraordinarily successful,'' the department said, and the airline can "compete as a strong and vibrant standalone firm.''
American and US Airways Group Inc. said that the merger would increase competition by creating "a stronger alternative to Delta, United, Southwest and others.''