Airlines, Justice agree to work with mediator on antitrust case

Posted Wednesday, Oct. 30, 2013  comments  Print Reprints
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AMR Corp. CEO Tom Horton said “there’s a way” to reach a settlement with U.S. antitrust regulators seeking to block the American Airlines’ merger with US Airways Group.

Horton made his comments Tuesday at a conference in New York, a day after the carriers and the Justice Department agreed to go to a mediator to try and resolve the federal lawsuit seeking to block the deal.

“It’s incumbent on us to make a very strong case and be ready to help bring about a sensible settlement,” Horton said. “I think there’s a way to do that.”

Investors have been watching the airlines for any signs that the suit may be settled, and shares of Fort Worth-based AMR (ticker: AAMRQ) rallied 46 cents, or 7 percent, after the disclosure of the mediator’s involvement.

Horton cited the airlines’ Oct. 1 settlement with the state of Texas, which had joined the federal suit.

“I think there’s a way to get there,” Horton said at the Buttonwood Gathering 2013 conference in New York City, without elaborating. “We’re hopeful.”

The Justice Department sued American’s parent, AMR Corp., and US Airways in August, claiming the planned merger would reduce competition and lead to higher prices. A trial is set to begin Nov. 25, and a status conference is scheduled for today.

The appointment of a mediator in complex lawsuits isn’t unusual, said Seth Bloom, a former trial attorney with the department’s antitrust division. In most federal civil litigation, courts require parties to engage in settlement talks before trial, he said.

“The nature of the complaint makes it a difficult one to settle, which isn’t to say these won’t be good-faith talks, but it’s nothing shocking,” said Bloom, president of Bloom Strategic Counsel in Washington. “They were always going to engage in these talks.”

In their filing to U.S. District Judge Colleen Kollar-Kotelly, both sides said the case is “proceeding apace and is on track to commence trial” as scheduled. The U.S. and state attorneys general have taken depositions of 19 employees of the two airlines, according to the report. Executives of other airlines have also been deposed. More than 2 million documents have been exchanged.

Kollar-Kotelly signed an order in August saying she “encourages the use of alternative dispute resolution.” Both sides said in a filing Aug. 28 that the case “would not likely benefit” from that process.

“The question in a settlement is always who makes the first step, and that’s where the mediator can be helpful with formulating hypothetical solutions,” said Robert Mann, an aviation consultant in Port Washington, N.Y.

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