Wednesday, November 6, 2013

AMR/US Merger Headed toward Settlement?

Reports of settlement talks between the DOJ and American Airlines and US Airways leaked out earlier this week. It appears to be the government that's pushing the settlement story at the moment, suggesting the DOJ at the very least wants to create a public impression that it made a reasonable attempt to resolve the matter before reaching trial. It's probable that the DOJ actually does want to settle the case, as its prospects of winning in court are highly uncertain. Attorney General Eric Holder's remarks suggest that the DOJ is seeking slot divestitures at Washington Reagan National, which was expected, and at least one other airport, likely New York LaGuardia, which comes as a surprise. Slot divestitures alone would fail to address many of concerns raised in the DOJ complaint, leading to speculation that the merged airline may also be required to continue US Airways' Advantage fares program for a specified duration post-merger.

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