Sun, Sep 01, 2013 - Page 13 News List

Airline-merger trial to start in November: judge


A US federal judge said on Friday that the government’s lawsuit to block the proposed merger of American Airlines and US Airways will start on Nov. 25, a timetable favored by the airlines.

The US Department of Justice had wanted the trial to start in March next year, saying it needed more time to prepare for the complex case. The airlines said that such a long delay would threaten their merger.

US District Judge Colleen Kollar-Kotelly said in court on Friday that March was “too far off.”

The companies were close to completing a merger to create the world’s biggest airline, but the justice department and six states sued this month to block the deal. They said it would reduce competition and lead to higher prices for travelers. They said that the combined American-US Airways would be too dominant at Reagan National Airport outside Washington and on many routes around the country.

While the hearing before Kollar-Kotelly was mainly procedural, aimed at establishing timetables for reviewing documents and other preparations for trial, attorneys for the two sides did manage to preview their key arguments.

“This is a very dynamic industry,” said Richard Parker, an attorney representing US Airways.

The two airlines argue that their merger would increase competition by creating another big competitor to United Airlines and Delta Air Lines, which grew through recent mergers.

Parker also pointed to the presence of other competitors, including Southwest, which carries more passengers within the US than any airline.

“We will be talking to these airlines,” Parker said.

A review of other airlines’ documents and interviews of their executives will establish that competition in the industry is robust, he said.

However, the justice department’s lead attorney said that the proposed merger raised a number of competitive issues, including prices and the impact on some markets. The government will want to question airline executives about, for example, how fees are set for baggage and ticket changes, department attorney Mark Ryan said.

Ryan said it was impossible to accept the airlines’ assertion that a plan to cut costs would make the combined new carrier more efficient and save consumers money without the government being able to see details of the plan.

Parker cited the government’s previous approval of big-airline mergers, such as Northwest with Delta and United with Continental.

“By that standard, our merger passes muster by 10 miles,” he said.

Justice department lawyers have also pointed to recent record profits at both airlines — July’s profit was a one-month high at American parent AMR Corp, which has been cutting costs under bankruptcy protection — to argue that the companies do not need to merge to survive.

Both sides said in a court filing this week that they were open to a settlement that would avoid a trial, although each made comments suggesting that they were not close to agreement.

If the merger is blocked, AMR will have to rewrite its plan for emerging from bankruptcy protection. The merger is a key part of that plan.

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