American Airlines CEO Is Optimistic About the DoJ Settlement
AMR Corp. (AAMRQ.PK) and American Airlines CEO Tom Horton said he believes “there’s a way” for American and US Airways (NYSE:LCC) to reach an agreement with the U.S. Department of Justice on their planned merger.
Speaking to Bloomberg after a panel discussion in New York on Tuesday, Horton said, “If there’s a reasonable settlement, I think it’s better for both sides” than proceeding to go to a trial, which is scheduled to begin on November 25.
On Wednesday, sources familiar with the matter told Bloomberg that the airlines and the DoJ are indeed in talks to try and work out an agreement before going to trial. Lawyers for the airlines and antitrust officials at the DoJ are talking over antitrust concessions the DoJ wants in order to drop the suit blocking the merger, the sources said. Such concessions would likely involve the Ronald Reagan International Airport, where the combined airlines would own 69 percent of the takeoff and landing slots should a merger go through without concessions.
The DoJ sued to block the merger between the two airlines in August due to concerns that it would cut down too much on competition and lead to higher airfare prices for consumers. The merger had already received approval from European regulators, AMR Corp.’s creditors, and shareholders when the Justice Department made the surprise move to block it, disrupting AMR Corp.’s bankruptcy exit plan. The merger would create the world’s largest airline.
“It’s incumbent on us to make a very strong case and be ready to help bring about a sensible settlement,” Horton said to Bloomberg, without giving any details on what the airlines might be willing to give up in order to appease the DoJ. “I think there’s a way to do that.”
US Airways, American Airlines, and the DoJ have all said in the past that they’d be willing to come to some sort of agreement on the matter, so now it remains to be seen if an agreement can be reached before they are due in court. In a document filed by the parties at the end of August, the DoJ said it’s “open to a settlement that addresses the anticompetitive harms posed by the merger but have not yet received any such proposal from the defendants.”
The airlines already made some antitrust concessions to the European Commission regarding slots at London’s Heathrow Airport, so it’s possible they may be open to more negotiation if it means they can move forward with the merger.
Since all the parties have said they’d be open to reaching an agreement and have agreed to a mediator suggested by the court, it remains to be seen if things could possibly be settled before heading to trial. US Airways and the Justice Department both declined to give Bloomberg a comment on Horton’s statements. The airlines and the Justice Department also declined to comment on settlement talks.
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