The Latest News in the American and US Airways Merger

It has been over a month since I last wrote about the American/US Airways merger, and I figured it was probably time to check in on things. Back then, I said “there shouldn’t be anything particularly interesting to the general public until the trial happens.” That’s true in a sense, but that doesn’t mean that there hasn’t been any action at all. Let’s take a look at what’s been going on.

The Department of Justice Tries More Delay Tactics (part 1) The Department of Justice (DOJ) and the airlines are all in the middle of sifting through thousands upon thousands of documents, asking for more, and talking to people in order to prepare for the trial. DOJ’s playbook seems to be full of ways to slow down this process. In this case, DOJ is refusing to turn over the data the airlines want.

The airlines filed two motions with the court trying to force DOJ to fork over the info. The first asks for the “factual record on which the [DOJ] approved four prior airline mergers.” The second asks for “the identities of the third parties who [DOJ interviewed during the merger investigation] and the factual information those witnesses disclosed.” DOJ, naturally, has objected and says that info doesn’t need to be disclosed.

The decision from the “Special Master” (law names are awesome) is that DOJ shouldn’t have to turn over any of this except for one document. Even with that doc, by fighting this, DOJ has at least delayed the amount of time the airlines have to review. Point: DOJ

The Merger Agreement is Extended American and US Airways had originally set December 17, 2013 as the date when either party could back out of the merger if it hadn’t been completed. But now, that has been extended to January 18, 2014. (A couple exceptions: If the court ruling comes in before January 3, then the airlines have 15 days to complete the merger before either side can walk away. Or if they lose the case, then they will be able to cancel 5 days after the ruling is final.)

Does that matter? It’s more symbolic than anything. This agreement never meant the merger had to be terminated on December 17 but rather made it an option. The decision by both airlines to extend it a month shows that both sides are behind the merger being completed. It looks good to see them acting on the same page. Point: the airlines.

The Department of Justice Tries More Delay Tactics (part 2) You know it was just a matter of time before DOJ requested that the trial be delayed because of the government shutdown, right? It didn’t actually take much time at all. The morning the shutdown went into effect, DOJ asked for a delay in the trial. To be fair, DOJ protocol says they have to ask for this, but the judge didn’t budge. The request was shot down within hours of the filing saying that too much was at stake to make this trial wait. Point: the airlines.

Texas Pulls Out of the DOJ-led Lawsuit There aren’t a lot of states participating in the lawsuit in the first place, but one of the strangest was Texas, a state that had so much to gain from this merger actually going through. Now, Texas has withdrawn its participation in the lawsuit against the merger thanks to a written guarantee that American will keep service to all Texas airports for three years and keep the headquarters there as well.

This is all just a political ploy. The Attorney General Greg Abbott is running for governor, and he was able to get a double whammy out of this one. First, he fought the merger trying to attract moderate Democrats to his cause. (His biggest Democratic opponent supports the merger, so he had to hope this would sway some of those who don’t like the idea.) For his encore, he was able to get some good camera time saying he saved Texas with this agreement. The reality is that it brings nothing to the state that wouldn’t have been there anyway. But if he can settle, why can’t others? Point: the airlines.

— We continue to march toward that November 25 trial date and now we have more clarity on how long it will take once it starts. The last day of testimony is expected to be December 16 or 17. Final arguments would be made January 6 with a ruling expected by January 10. In other words, the judge seems quite cognizant of the January 18 date we talked about earlier and wants to get it done quickly. But we may have to wait until the new year to get our answer.


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