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Today marks the beginning of what is expected to be extensive haggling between American, US Airways, and the DOJ. With enough concessions, the airlines still have a shot at completing their merger.
In the first public announcement since news broke that the U.S. Justice Department filed a lawsuit to block the merger, American and U.S. Airways say they intend to wage a “vigorous and strong defense” against the anti-trust suit.
US Airways CEO Doug Parker wrote in a letter to employees that he no longer expects the merger to close in the third quarter, but he remains hopeful that the litigation will be resolved and that the merger will still be completed in 2013.
Parker notes that other companies have experienced similar setbacks, but have gone on to complete their mergers. The full letter from Parker is below:
Additional links on today’s merger setback:
» 8 Reasons Why U.S. Government Wants to Block American-US Airways Merger
» U.S. Justice Dept Files Anti-Trust Lawsuit To Block American-US Airways Merger
» History of the American-US Air Merger Story So Far, in 10 Links
The airlines argue the benefits of the merger would include enhanced competitiveness against domestic and international carriers, better long-term opportunities for employees, more flight options, and improved in-flight and customer service.
The full comments released to the press and public from both airlines are as follows:
We believe that the DOJ is wrong in its assessment of our merger. Integrating the complementary networks of American and US Airways to benefit passengers is the motivation for bringing these airlines together. Blocking this procompetitive merger will deny customers access to a broader airline network that gives them more choices.
Further, this merger provides the best outcome for AMR’s restructuring. The widespread support from the employees and financial stakeholders of both airlines underscores the fact that this is the best path forward for both airlines and the customers and communities we serve.
We will mount a vigorous defense and pursue all legal options in order to achieve this merger and deliver the benefits of the new American to our customers and communities as soon as possible.
Update: Below is the letter American Airlines CEO Tom Horton sent to employees today.
Dear American Team,
Today we learned the Antitrust Division of the U.S. Department of Justice (DOJ) will oppose our pending merger with US Airways. I wanted to quickly let you know the implications of this decision and to explain what’s next.
As you probably know, this merger in the context of a restructuring, has been a very complex undertaking. It has formed the basis for an unusually successful restructuring, with very positive outcomes for our people, our customers, our owners and the communities we serve. But, it was also subject to a number of approvals including US Airways shareholders, AMR creditors, the Court, and the United States and European Union regulatory authorities. The US Airways and AMR financial stakeholders have voted overwhelmingly in support of the merger and the EU approved the merger. We always expected U.S. regulatory approval to be the final hurdle to clear.
We and our counterparts at US Airways have been working with the DOJ staff for months to ensure that they had an informed view of the merger. We have maintained that the merger is complementary (only 12 overlapping routes), that it provides significant customer benefits and that it enhances competition in the airline industry.
Since the DOJ has formed a contrary view, the matter will now be settled by the courts. The DOJ has filed a lawsuit in federal district court to enjoin the proposed merger. We and US Airways will vigorously defend our position. While we do not yet know how long the court process will run, it will likely take a few months.
In the meantime, American and US Airways will continue to operate as independent companies and competitors. All recent leadership announcements for the new merged American will be on hold until such time as the merger receives final clearance.
Throughout this restructuring, the people of American have stayed focused on caring for our customers day in and day out. And the results speak for themselves. American is again strong, profitable and competitive as evidenced by our record-setting second quarter results. As we work through the court process to clear our merger, let’s keep building the momentum of the new American.
Thanks for all you do.