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American Air and US Airways Met With Justice Department Prior to Suit

Aug 24, 2013 8:51 am

Skift Take

The DOJ’s action last week may have been a shock, but it likely wasn’t a huge surprise.

— Jason Clampet

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American Airlines and US Airways met with the U.S. Department of Justice only a week before the government filed an antitrust lawsuit against the carriers’ merger.

The details were revealed by the Justice Department in a court filing Friday as part of American Airlines’ bankruptcy reorganization case.

The Justice Department sued last week to block the merger between the airlines on antitrust grounds, claiming that it would harm competition and raise prices for consumers.

The lawsuit came as American Airlines was just weeks away from potentially exiting bankruptcy and merging with US Airways.

“Throughout its investigation, the department engaged in a series of meetings in late July and early Aug. 2013,” the filing states.

It says the airlines wanted a meeting with Justice Department antitrust lawyer William J. Baer before Aug. 5, which was 10 days before the scheduled confirmation hearing in the bankruptcy case.

“That meeting took place on August 6, 2013 (at the Airlines’ request), and the United States filed its suit on August 13, 2013,” the Justice Department’s filing states.

It outlines seven months of investigations by the Justice Department into the potential merger. The government received word from the airlines in late January about their intention to merge, weeks before the actual merger announcement on Feb. 14.

The airlines turned over much of their paperwork in May and spent the summer meeting with Justice Department officials.

Lawyers for the airlines have said that the Justice Department refused to listen to settlement requests.

The two airlines are hoping to start arguing the antitrust case as soon as Nov. 12, while the Justice Department has asked for a Feb. 10 trial data.

U.S. District Judge Colleen Kollar-Kotelly has set an Aug. 30 hearing in New York to discuss the date of the trial.

Unions representing 70,000 workers at American Airlines and US Airways issued a statement late Thursday saying they want the trial to take the earlier timeline.

The antitrust lawsuit has put not only the merger between the airlines at risk, but also American Airlines’ hope to emerge from bankruptcy after nearly 21 painful months of hearings, cuts and negotiations.

U.S. Bankruptcy Judge Sean Lane will consider next week how the antitrust lawsuit impacts American’s reorganization plan. But with the plan hinging solely on the merger, a ruling on the bankruptcy may be a moot point until the antitrust objections are settled.

On Friday, a lawyer for American Airlines said the bankruptcy court should go ahead and confirm the reorganization plan. American Airlines lawyers say the plan should be approved because the companies have made plans to come back to court if regulators succeed in stopping the merger.

The Justice Department filing said the government is taking no position on what the bankruptcy court should do.

(c)2013 Tulsa World (Tulsa, Okla.). Distributed by MCT Information Services. 

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