Skift

Airlines

The new American Airlines will not see lift-off by mid-August

  • Skift Take
    At play in the merger is the shrinking service at smaller markets across the U.S. Although it’s not all US Airways and American Air’s fault, they’re going to have to at least provide lip service to the issue.

    US Airways Group Inc. and AMR Corp.’s American Airlines won’t learn if their $11 billion merger passes U.S. antitrust review before a court hears American’s request to confirm its bankruptcy reorganization plan in August, people familiar with the matter said.

    The Justice Department still is analyzing whether the combination will create a monopoly in any markets and isn’t close to issuing a decision, said three people, who asked not to be named because process is confidential. The ruling is one of the few remaining hurdles to be cleared before the carriers can combine to form the world’s largest airline.

    “Ordinarily this might seem like a long time for the merger review,” said Seth Bloom, the former general counsel of the Senate Antitrust Subcommittee who’s now in private practice in Washington. “But because they’re waiting for the bankruptcy court to confirm the plan, I wouldn’t read substantive conclusions into that.”

    American will ask the bankruptcy court overseeing its Chapter 11 case in Manhattan to confirm the airline’s reorganization plan at an Aug. 15 hearing.

    Ed Stewart, a spokesman for Tempe, Arizona-based US Airways, declined to comment on the timing, as did American spokesman Michael Trevino.

    Competitors including JetBlue Airways Corp. and Southwest Airlines Co. have questioned the extent of control the new American will have over Washington’s Reagan National Airport. US Airways Chief Executive Officer Doug Parker, who will lead the combined carrier, has said he doesn’t expect any antitrust issues to be raised.

    Airport slots

    U.S. regulators limit takeoff and landing slots at the airport, where US Airways has said the post-merger American will control 67 percent of daily departures. The combined carrier will have 25 percent of the aircraft seats in the market, which includes Washington Dulles International and Baltimore/Washington International Thurgood Marshall airports, US Airways has said.

    In addition to securing approval from the bankruptcy court and antitrust regulators, US Airways shareholders have to support the combination in a July 12 vote before the merger can close. The companies have said they expect that to happen in the third quarter.

    US Airways and American agreed in February to combine as part of AMR’s bankruptcy restructuring. AMR creditors will own 72 percent of the equity in the combined airline, while 28 percent will go to US Airways shareholders. Together, they will pass United Continental Holdings Inc. as the biggest airline, based on passenger traffic.

    US Airways rose 1.6 percent to $17.22 at 4:02 p.m. in New York trading. The shares have climbed 28 percent this year, trailing a 42 percent rise in the Bloomberg U.S. Airlines Index.

    The case is In re AMR Corp., 11-bk-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

    Editors: Fred Strasser, James Callan. To contact the reporters on this story: Sara Forden in Washington at sforden@bloomberg.net; Mary Schlangenstein in Dallas at maryc.s@bloomberg.net. To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Ed Dufner at edufner@bloomberg.net. 

    Photo Credit: US Airways and American Airlines aircraft line up. Associated Press
    Subscribe Now

    Already a member?

    Already a member?

    Subscribe to Skift Pro to get unlimited access to stories like these

    Subscribe Now

    Already a member?

    Exit mobile version