DoJ and airlines argue over merger trial start date

US Airways and American Airlines want a short trial to begin soon, while the Justice Department prefers a much later time.

By Benzinga Aug 29, 2013 10:11AM

Laws (© Medio Images/SuperStock)By Jim Probasco


The question of whether US Airways (LCC) and American Airlines (AAMRQ) will be allowed to merge will be settled in court. What is not settled is the date of the trial.

Reuters reported Tuesday that the Justice Department asked a federal court to start the trial March 3. The airlines had requested a 10-day trial to begin on Nov. 12.


The U.S. Justice Department filed a lawsuit August 13, asking that the planned merger be denied on the grounds it would reduce competition and lead to higher airfares for passengers.

The airlines maintain that the merger is needed to save American Airlines, which is currently under Chapter 11 protection, and that the merger would allow the new airline to be more competitive with Delta (DAL) and with United Continental (UAL).


The companies have incentive to push for a quicker, shorter trial. First, holding a planned merger deal together for months is difficult and puts shareholders of both airlines in limbo. Second, American is especially vulnerable given the fact it is emerging from bankruptcy.


In a court filing made Tuesday, the Justice Department said it needs until March 3, 2014, to develop evidence and prepare for trial according to The Dallas Morning News.


In the filing the Justice Department argued, "Defendants' attempt to rush this matter to a trial on the merits in fewer than 75 days following the initial scheduling conference creates the very real risk that a challenge to a $14 billion merger -- in dollar terms one of the largest merger challenges ever adjudicated -- will be resolved on less than an appropriate record."


The airlines countered that US Airways provided the Justice Department with documents pertaining to the merger in May 2012, more than 15 months ago. The companies further pointed out that other merger cases involving the Justice Department have only taken 70 days from filing to trial start.

"Unnecessary delays also prevent American's financial stakeholders, which includes creditors, shareholders and employees, from realizing the benefits and improved certainty that will come from American's emergence from Chapter 11," the airlines said in a written statement reported by The Associated Press.

Washington, D.C., federal judge, Colleen Kollar-Kotelly, will hold a conference on the trial date Friday. It is uncertain whether the actual trial date will be set at that time.

Meanwhile, on Monday, American Airlines reported a profit of $292 million for July representing the biggest one-month profit in the company's history, according to CEO Tom Horton.


The Department of Justice noted the event, saying that the company's restructuring had been "extraordinarily successful," and adding that the airline could "compete as a strong and vibrant standalone firm."


At the time of this writing, Jim Probasco had no position in any mentioned securities.


More from Benzinga

0Comments

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

120
120 rated 1
268
268 rated 2
439
439 rated 3
709
709 rated 4
641
641 rated 5
609
609 rated 6
640
640 rated 7
516
516 rated 8
272
272 rated 9
152
152 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
EXCEXELON CORPORATION10
TAT&T Inc9
VZVERIZON COMMUNICATIONS8
CTLCENTURYLINK Inc8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.