Friday, August 16, 2013

Reactions to DOJ Suit

To close the week, here is a compilation of various commentary and news updates on the DOJ's surprising decision to challenge the American Airlines/US Airways merger:

  • A highly critical take on the DOJ's decision.
  • And a more positive view.
  • Former American Airlines CEO Robert Crandall isn't a fan of the move
  • Loose lips sink planes? The DOJ complaint makes extensive use of quotes from US Airways executives. 
  • A good recap of negotiations leading up to the DOJ announcement.
  • Texas Attorney General Greg Abbott explains why Texas joined the DOJ suit.
  • Some are skeptical about the prospects for a settlement.
  • Lawyers from the two carriers discuss plans to fight the suit.
  • Meanwhile, the judge overseeing American's bankruptcy process postponed his decision on the carrier's reorganization plan with the merger up in the air.
  • A judge has been assigned to the antitrust case.
  • Staffing decisions related to the merger are being put on hold, at least temporarily.
  • Airline stocks prices fell.
  • Finally, this story suggests that American and US are largely the victims of bad timing. I think there's some truth to that. The industry is more consolidated now than when earlier mergers were approved. It is also more profitable. On the government side, the DOJ has had time to witness the consequences and feel some regret over the approval of earlier mergers and to gain comfort with enforcing the new Horizontal Merger Guidelines. Related, though unmentioned in the article, the DOJ's argument about coordination of baggage fees wasn't available for some of the earlier mergers.

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