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American and US Airways are in a holding position until a decision is made and waiting until March puts unnecessary strains on both operations. The appointed judge is known for being fair and her first statement supports that reputation.

A federal judge said on Friday that the trial of a U.S. government lawsuit to block an American Airlines merger with U.S. Airways Group Inc should take place before March, the date sought by the U.S. Justice Department.

U.S. District Judge Colleen Kollar-Kotelly said in open court: “March 3, I think, is too far off. It needs to be a tighter, expedited schedule.”

The Justice Department had asked for a March trial while the airlines had been pushing for November because holding a deal together for months puts a strain on the parties. During the merger review and challenge process, the companies are essentially in limbo, unable to merge but unable to make independent long-range plans.

The Justice Department filed a lawsuit in mid-August to block the deal, which would create the world’s biggest air carrier. The government said the merger would lead to higher prices for customers, while the companies said it would make them more competitive and strengthen the market.

The two airlines and the Justice Department indicated in a joint court filing on Wednesday that they were open to settling the matter without a court fight.

The government, however, said that while it was prepared to settle, it had not been given an offer from US Airways and American that “addresses the anticompetitive harms posed by the merger.”

In its initial complaint, the department focused on Ronald Reagan National Airport, outside Washington, D.C., where the two companies control a combined 69 percent of takeoff and landing slots. It also listed more than 1,000 city pairs where the two airlines dominate the market.

The two airlines said in Wednesday’s joint filing that they “continue to believe there ought to be a realistic possibility of settlement.”

The companies have said that the deal is critical for American Airlines, whose parent, AMR Corp, has been operating under Chapter 11 protection since late 2011.

A U.S. bankruptcy judge on Thursday hinted he would approve AMR’s bankruptcy exit plan despite the government’s challenge to its main component – AMR’s planned merger with US Airways.

At a hearing at U.S. Bankruptcy Court in Manhattan, Judge Sean Lane held off on confirming the plan for AMR but said he found “arguments in favor of confirmation to be fairly persuasive.”

Any divestitures or settlement terms with the Justice Department would also require Lane’s approval, the parties argued.

If the Justice Department succeeds in blocking the merger it would put AMR’s restructuring back at square one, requiring it to forge new strategies for paying back creditors.

The case at the U.S. District Court for the District of Columbia is No. 1:13-cv-012346-CKK

Copyright (2013) Thomson Reuters. Click for restrictions

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Tags: american airlines, us airways