American, US Airways to Seek Extension for Merger Deadline, Defend Plans in Court Filings

By Paul Riegler on 11 September 2013
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American Ailines checkin

American Ailines checkin

American Airlines and US Airways, whose planned merger has been delayed by the Department of Justice antitrust lawsuit that was filed last month, said on Tuesday that neither party currently plans to abandon their support for the merger.  The two airlines also defended their merger in separate court filings that are a response to the DOJ suit.

The two airlines told members the creditors’ committee for American Airlines parent AMR Corp. that they plan to ask their boards of directors to extend the merger termination date beyond its current expiration, which is December 17, the Wall Street Journal reported.

Both airlines also filed court documents with the United States District Court for the District of Columbia late Tuesday.

In its filing, US Airways argued that the combination was lawful and should be allowed to go forward.  “Conservative estimates place the net benefits to consumers at more than $500 million annually,” the company wrote in its 50-page filing.

US Airways also argued that “[T]he government approval of these two mergers created airlines [United Airlines and Delta Air Lines] with much larger and more comprehensive networks” would leave both American and US Airways at a competitive disadvantage.

The airline pointed out that smaller, low-cost carriers such as JetBlue Airways and Spirit Airlines as well as Southwest Airlines and regional carriers currently carry 40% of total U.S. traffic.  “The demonstrable success of low-cost carriers is a market-driven response to consumer demand, but the [DOJ] complaint inexplicably ignores their profound and permanent effect on industry competition,” US Airways said, adding that the merger “will increase competition in every meaningful respect.”

In its filing, American wrote that those who are currently opposed to the merger “were ignoring the realities of the airline industry.”

“This transaction, viewed through the lens of the actual U.S. airline industry today, rather than some idealized vision of the past, does not violate the antitrust laws,” American wrote in its filing. “The airline industry is intensely competitive today and would remain so after this transaction.”

American did concede, however, that it “could compete  as an independent company, although it could not compete as effectively as it would with the improvements brought by the merger.“

American has been in bankruptcy-court protection since late 2011 and has planned its exit from Chapter 11 around the merger with US Airways.  The combination has the support of AMR creditors, unions, shareholders of both companies, and European Union antitrust regulators.

A judge will hear the case in November without a jury and rule as to whether the merger should go forward or not.

(Photo: Accura Media Group)

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