American Airlines and U.S. Airways will have to give up multiple flight routes if they want to settle an antitrust lawsuit filed by the Department of Justice, U.S. Attorney General Eric Holder said at a press conference today, according to Bloomberg News.
“What we have tried to focus on is to make sure that any resolution in this case necessarily includes divestitures of facilities at key constrained airports throughout the United States,” Holder said, without specifying the number of slots the government wants divested.
The airlines and the DOJ are discussing the possibility of giving up takeoff and landing slots at Washington, D.C.’s Ronald Reagan National Airport, among others, the Wall Street Journal reported late Sunday, citing a source familiar with the talks.
AMR is working to resolve the DOJ’s concerns in order to implement the merger with US Airways that is the centerpiece of its Chapter 11 reorganization plan, which has already received bankruptcy court approval. If the DOJ successfully blocks the merger, AMR must return to bankruptcy court and seek confirmation of an alternative plan that would reorganize AMR as a standalone company. If AMR and US Airways reach a settlement with the DOJ, AMR must file a motion with the bankruptcy court seeking approval of the deal. (See “American Airlines confirmation order filed, but exit still on hold,” LCD News, Oct. 22, 2013).
AMR, US Airways, and the DOJ agreed to the appointment of a mediator last week. In a joint status report to the District Court in Washington, D.C. overseeing the antitrust case, the parties did not identify the mediator, except to say it was a “mediator suggested by the court.” Similarly, the status report did not provide a mediation schedule, but did say, “[t]he case is proceeding apace and is on-track to commence trial on November 25, 2013, as scheduled.”
The DOJ suit filed this August lists hundreds of city pairs where the merger is presumptively illegal, because it would stifle competition. The suit focuses, in particular, on passengers to and from the Washington, D.C. area, where the combined airline would have a monopoly on 63% of the nonstop routes served by Reagan National.
Shortly before the DOJ filed its suit, the European Commission granted regulatory approval of the proposed merger, conditional upon the release of one daily slot pair at London’s Heathrow airport to allow for competition along the Philadelphia-London route. AMR agreed to drop the flight, but the DOJ is clearly seeking a much broader set of divestitures.
Florida Attorney General Pam Bondi, who joined the initial suit against the airlines along with the attorneys general from Arizona, Pennsylvania, Texas, Virginia, and Washington, D.C., met with AMR CEO Tom Horton on Friday and issued a statement indicating hope for a “timely resolution,” the Dallas Morning News reported. The meeting suggests Florida could soon reach its own settlement with the airlines, joining Texas, which voluntarily dismissed its claims in the suit in early October.
The antitrust suit is currently scheduled for a Nov. 25 trial in Washington, D.C., before U.S. District Court Judge Colleen Kollar-Kotelly. – John Bringardner