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.

American and US Airways Merger Waiting

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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44 Comments on "The Latest News in the American and US Airways Merger"

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c29flier
Guest
Brett – Your commentary about the government asking for a delay due to the shutdown is a bit snarky. I work for a government agency that’s been affected by the shutdown and we regularly work with DOJ. In my context, DOJ is the law firm who represents a client (my agency) in court, usually defending a decision by the agency. DOJ’s request was probably one of literally thousands that were filed in US District Courts across the country on that Monday, September 30th. The delay was granted in every case that I work on. I am also involved in a… Read more »
David SF eastbay
Member

With all the bad things wrong in this country the DOJ wants to spend time of a AA/US merger?

Nick Barnard
Member

I think the DOJ wanted to delay things due to the tea party’s shut down of the government, but the judge said no to that. From my understanding it was more along the lines of the judicial branch overruling the legislative branch which hamstrung the executive branch’s DOJ.

FrankV
Guest
Nick Give us a break with the shots on the Tea Party. They have no place in this blog or in the running commentary. It is absolutely unnecessary for you to bring your political biases into play. Yes, there is a government shut down. Yes, there has been widespread failure of the two party system Yes, there is plenty of blame to go around. No, I don’t want to read your politicizing here. Go post something on MSNBC, they live for that stuff. Frank p.s. — before you erupt, please note that I did not call you any name, and… Read more »
Nick Barnard
Member

Frank,

With the exception of taking a shot at the tea party, my comment is relevant to the DOJ’s response to the US/AA merger. It stands as an understanding of the procedural dance that was played and why the DOJ is still working on this case, but might not be working on others.

Nick

FrankV
Guest

Absolutely.
Agreed.

EMT
Guest

I used to like reading this blog, before you stated covering this merger. You seem to take pride in the bias with which you cover this story, and the masterful spinning that you do on every little bit of news. You’ve become the fox news of US-AA merger coverage. Your approach is unprofessional.

Nick Barnard
Member

EMT, The Cranky Flier an opinion blog. Where has CF been unprofessional? He’s stated his opinion, broken down the government’s positions in a reasonable manner and shown where they’re flawed. What more do you want?

j.monat
Member

The only reason the merger should be shot down is the awful, unimaginative and repugnant new paint job.

Nick Barnard
Member

Who knows if the new AA paint job will stay? AFAIK, Parker didn’t seem too enthused by the new paint job.

I wonder if the AA birds will start going into a modified US Airways colors (a la UA/Continental) and the newly painted birds will just be slowly repainted.

glen
Guest

Keep the merger……. kill the paint!

James S
Guest

There are now almost 150 aircraft in the new colors. 5-8 planes are repainted every week, plus new deliveries. The pace of repainting has sped up now that the summer schedule is over. The 777 fleet will likely be completely repainted by year’s end.

By the time the merger actually goes through (if it’s approved) there will be a very significant number of AA planes wearing the new scheme. The new management team is going to have much more pressing issues to deal with.

Nick Barnard
Member

If anything getting a cohesive brand quickly is one of the lessons that DL/NW, UA/CO, and to some extent WN/FL have taught. I expect there will be a fairly aggressive program to get the AA/US fleet into one color scheme.

I remember reading a letter from US Air’s chairman in that one of the challenges they faced was a completely disorganized brand. I remember that he said they had five different colors of seat belts. (PSA probably contributed four of those.)

Sooner Parker and crew can reduce the tendency for folks to “see” pmAA or pmUS the better.

Russ Fitton
Guest

AA’s Horton probably doesn’t want the merger to happen unless he gets his payoff. It would be funny if he was one of the people the DOJ talked to.

1js7371
Member

Mr. Cranky…Is it true that Horton has agreed to forego his $20 million golden parachute to grease things along?

mandel.jerry1
Member

DOJ says the merger will cut service and increase fares and fees. How naive. Do they really believe the separate airlines wouldn’t do the same?\\ I think it is some DOJ people trying to justify their positions by doing something-anything.

George
Guest
Just a few thoughts on a lot of the comments, Cranky-you’re right, it is an important matter, but if DOJ runs out of money-they will shut down. Legally when the workers are told to go home, they can not do any Government work under any circumstances. I know this because I wiork for the government, and our money runs out in mid November, and we will go home. Another factor is if the money problem is solved today-it will take about 2 weeks to get back to normal. Some posters today, and previously complained, screamed, etc on why is DOJ… Read more »
Nick Barnard
Member

The US merger with DL never got to a full blown DOJ review. DL’s creditors and employees shot down that proposed merger.

There were two possible of US/UA mergers you’re thinking of. There was a 2000 attempted merger of US/UA where US would’ve been bought by UA. The DOJ blocked that. In 2010 there were discussions of a US/UA merger, but those got curtailed, and they might’ve been a way for UA to push CO into merging with them.

Bill from DC
Guest

If DOJ runs out of money due to shutdown issues, it seems only fair that they should have to drop the case. The rest of the world shouldn’t have to wait for Washington to get its act together.

Or is this just too much common sense to have any relevance to my dimwitted neighbors in the house and senate office buildings just a few blocks up my street?

c29flier
Guest
I’m not sure I get the “common sense” aspect of your comment? DOJ does not control whether congress and the president can agree on a CR or the debt ceiling. The reality is that the shutdown impacts normal government activities, one of which is running DOJ’s anti-trust division. It’s also going to affect the court that’s hearing this case, likely to the point where the court will reschedule the trial. If not, it will be something of a miracle. Yes, it’s a big case, but the airlines will survive just fine for another quarter (they’re both profitable, despite AA being… Read more »
Shane
Member

I believe if the shutdown continues, the courts will run out of money also by mid-November. No judge, no prosecution, no proceedings.

Nick Barnard
Member

The interesting question is if the courts run out of money can US/AA argue that their right to speedy justice is being infringed upon, and ultimately force the DOJ to drop the case and/or the court to provide summary judgement for US/AA?

Tony
Guest

The retirerd employees of American are getting screwed….Their passes and priority is being ignored…after 41 years of flying, why should I have to come AFTER U.S. Air employees who are on the job for a year or two….How is that fair after I gave loyal service for so many years

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[…] DOJ in this lawsuit but some states as well. This provision basically gives these states what the combined airline already offered in Texas to get that state’s attorney general to pull out of the lawsuit. The list of cities served by […]

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