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August 28, 2013

American, US Airways reiterate request for November anti-trust trial date

American Airlines and US Airways reiterated their request to a federal judge for a November anti-trust trial date.

In a filing made on Wednesday, the two carriers said the U.S. Department of Justice's suggestion of a March 2014 trial date puts its merger in jeopardy.

"Whether plaintiffs just don’t understand the industry or choose to misleadingly focus on the trees instead of the forest, the fact is that American today continues to be fully subject to the ebbs and flows of the airline industry, and is even more vulnerable until it can emerge from bankruptcy," the filing said.

Judge Colleen Kollar-Kotelly has scheduled a conference between the airlines and government attorneys for Friday where she may decide on when the anti-trust trial will occur.

Also in the filing, American and US Airways refuted the DOJ's assertions on why it needed 180 days before going to trial.

• “Six months to a full trial on the merits is in keeping with timetables in comparable merger cases.” (Opp’n at 8.) As the table below demonstrates, of the 23 cases cited by the parties, only 3 had trial schedules as long as plaintiffs’ request, whereas 14 had schedules that were actually shorter than what defendants propose. Moreover, not a single case cited by plaintiffs or defendants in which the schedule went longer than 110 days actually made it to a final adjudication after a trial on the merits. That is exactly what drives the Airlines’ concern here: that a trial delayed according to the plaintiffs’ schedule would knock the bottom out of this merger.

• “[I]nterested parties knew what should have been clear: that a merger of two large firms competing in already highly concentrated markets might draw an antitrust challenge.” (Opp’n at 3.) In fact, the DOJ approved three large airline mergers in the last five years using criteria that, if applied here, would demonstrate that US Airways/American Airlines is even more pro-competitive than the others.

• “American reported record profits in the second quarter of this year.” (Opp’n at 3.) In fact, prior to its restructuring, American lost $10 billion in the last decade.

• “American’s restructuring efforts have been extraordinarily successful and have positioned the company to compete as a strong and vibrant standalone firm.” (Opp’n at 3.) Although American has made progress in restructuring, it has not yet presented an alternative plan to the bankruptcy court.

• The harm of delay is merely costs that American “may incur” and “some uncertainty” that “employees will face.” (Opp’n at 5.) This is a significant understatement of the harm attendant to a delayed trial. The Airlines conservatively estimate that this merger will result in net direct consumer benefits of conservatively $500 million annually. The pay raises and benefits improvements that have been promised to both airlines’ employees are put on hold―amounting to $400 million annually. That translates to nearly $2.5 million permanently lost for every day of delay. And American’s employees, entitled to an equity stake worth about $2 billion (at today’s valuations) when the merger is closed, would have to stand by and watch as the value of that equity is buffeted by the market.

Click here to Download the airlines' filing

-Andrea Ahles


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Russ Webber

Let this merger happen; for the industry, for the consumer and for the employees!


Will be more layoff,to many chiefs less indians.

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