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American and US Airways Get Their Day in Court With a Side of Turkey and Stuffing

If you’re a fan of justice, then you’ll agree that Friday was a good day. The judge in the Department of Justice (DOJ) lawsuit trying to stop the American/US Airways merger set the trial to begin on November 25, right before Thanksgiving. That means that if this merger is stopped, it will have to be on the strength of DOJ’s argument instead of simply by having the clock run out.

American US Airways Thanksgiving Trial

After DOJ filed suit to stop the merger, the two sides proposed very different timetables. American/US Airways proposed a November 12 start date but said they could have been ready as early as October. In other words, they were confident of their arguments and wanted to go to trial quickly.

Meanwhile, DOJ proposed a February trial date but when the judge said she had another trial scheduled, DOJ pushed the request out until March. That kind of delay made me think DOJ wasn’t as confident in its case as it originally suggested and needed more time, but it could have just been an insurance policy. A delay that long could kill the merger because the parties can’t wait forever. Time is a killer.

The judge agreed with the airlines that they deserved a speedy trial, and so the date was set for November 25. It may seem a little strange that it will start the Monday before Thanksgiving, but it sets up a good timeline. The airlines predict a 10 day trial, though it could go a couple days longer. Either way, we should have a decision before everyone takes off for the holidays.

More importantly, we may very well have a decision by the self-imposed December 13 merger deadline. If the merger isn’t completed by then, either party could theoretically walk away per the merger agreement. Both parties have been clear that they don’t plan on walking away, but who knows if that would have been true if the trial was delayed all the way until March.

So what happens now? A bunch of technical stuff. There will be depositions and file exchanges, and a lot of things will have to be filed with the court at several steps along the way. As far as I can tell, there shouldn’t be anything particularly interesting to the general public until the trial happens… with one possible exception.

There is still always the chance that the two parties could come to a settlement that would allow the merger to go through with concessions. They both say they’re open to hearing proposals but neither side seems to actually be proposing anything anymore. I’ve already noted how I think a settlement is pretty unlikely, but I do wonder if DOJ will start to feel some pressure.

The easiest way for DOJ to win was to push the timeline out and hope the merger fell apart on its own. It lost that battle, so now it has to win on the merits of its arguments. If it’s not able to turn anything up over the next couple of months, it might decide that it’s better to settle and look stupid than it is to go to trial and lose everything.

I would say the airlines could come to the same conclusion, but I’m really not sure how they could craft a settlement that would satisfy DOJ unless DOJ decides that its case is weak enough that it better start negotiating.

Regardless of what you think about this merger, you should be happy about the trial date. It’s only fair that the airlines have their day in court in a timely manner… assuming it gets that far.

[Original knife, turkey, table, and stick figures via Shutterstock]

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