American, US Airways contest antitrust claims in court filings

Posted Wednesday, Sep. 11, 2013  comments  Print Reprints

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American Airlines and US Airways vigorously defended their proposed merger to a federal judge, denying U.S. Department of Justice allegations that the airlines’ combination is anti-competitive and would hurt consumers by raising fares and increasing fees.

Over dozens of pages, attorneys for the two airlines refuted the government’s antitrust complaint line by line in filings made in the court of U.S. District Judge Colleen Kollar-Kotelly on Tuesday evening.

“[The combined airline] would generate enormous direct consumer benefit, most significantly by creating a unified network affording a vastly expanded array of flight options for travelers — taking more passengers where they want to go when they want to go there,” American Airlines’ parent company, Fort Worth-based AMR Corp., said in its filing.

Kollar-Kotelly has scheduled a Nov. 25 trial in Washington, D.C., to hear the antitrust lawsuit.

In its complaint filed in August, the Justice Department listed over 1,000 city-pair routes that would have less competition if the merger goes through. On these routes, the government says consumers would be left with fewer choices for air travel, which it maintains could result in higher airfares.

“The Complaint presents no coherent rationale supporting its challenge to the merger. Rather, it cobbles together a collection of ad hoc contentions based on anecdotes involving small numbers of passengers and historical e-mails and other documents irrelevant to this transaction, while ignoring the central facts and economic realities of today’s airline industry,” American’s filing said.

Seven state attorneys general, including Texas Attorney General Greg Abbott, have joined the Justice Department’s lawsuit over concern that air service may be cut at some airports if the merger is approved.

While airline attorneys acknowledge that AMR considered a stand-alone restructuring plan in the early months of its bankruptcy, they reiterated that the merger plan is the only one that AMR creditors have voted for. They argue the merger will make the new American Airlines more competitive with the larger United Airlines and Delta Air Lines, themselves the products of recent mergers.

“It is in this vigorously competitive world that US Airways and American Airlines seek to merge so that they can provide similar benefits to customers and have the chance to compete with the new Delta and new United. Taken separately, each of US Airways and American is incomplete,” said the filing made by Arizona-based US Airways.

In its filing, US Airways attorneys also argued that it should not have to pay the legal fees and costs incurred by the government during the antitrust suit, asking instead that the court make the government pay for US Airways’ legal costs.

Separately, the carriers expect U.S. Bankruptcy Judge Sean Lane to decide at hearing later this week whether to approve American’s restructuring plan, which includes the merger. Lane, who has indicated that he may confirm the plan, has said he expects to rule by Thursday.

Andrea Ahles, 817-390-7631 Twitter: @Sky_Talk

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