Department of Justice Announcement: A Message from CEO Doug Parker

[freedom]

Department of Justice Announcement: A Message from CEO Doug Parker

August 13, 2013

Dear US Airways Team Members,

The DOJ has unfortunately just announced that it intends to try and block our proposed merger with American Airlines. We are extremely disappointed in this action and believe the DOJ is wrong in its assessment. We will fight them. We are confident that by combining American and US Airways we are enhancing competition, providing better service to our customers and improving the industry as a whole. We are mounting a vigorous and strong defense in federal court against the DOJ’s case in order to bring our airlines and talented team members together as the new American Airlines.

Other companies have found themselves in similar circumstances and gone on to successfully close their merger. This is still very new information, so we don’t have all the specifics on timing yet, but we will continue to keep you posted through all the usual channels, including Arrivals.

I am certain that our proposed merger is the best path forward for both airlines and all of our stakeholders - including you. In fact, expanding our networks was the motivation for bringing our two great airlines together. As the new American we will be a premier global carrier that is positioned to meet our customers’ needs better than any other airline, while also competing more effectively and profitably in the global marketplace. We are 100 percent committed to completing the merger of our two great airlines as soon as possible so that we can start to deliver the benefits of the new American to our stakeholders.

In light of today’s announcement, the companies no longer expect the merger to close during the third quarter of 2013. However, we are hopeful that the litigation will be successfully concluded and we will close the merger before year end.

Thank you for continuing to provide our passengers with the outstanding customer service that they expect from us. We will keep you posted on any developments, but in the meantime, it is business as usual.

Thank you for your ongoing support throughout the merger process. I appreciate your patience and dedication as we work to complete this combination.

Sincerely,

Doug

 

[freedom]

August 13, 2013

A Message from Chairman and CEO Tom Horton

Dear American Team,

Today we learned the Antitrust Division of the U.S. Department of Justice (DOJ) will oppose our pending merger with US Airways. I wanted to quickly let you know the implications of this decision and to explain what’s next.

As you probably know, this merger in the context of a restructuring, has been a very complex undertaking. It has formed the basis for an unusually successful restructuring, with very positive outcomes for our people, our customers, our owners and the communities we serve. But, it was also subject to a number of approvals including US Airways shareholders, AMR creditors, the Court, and the United States and European Union regulatory authorities. The US Airways and AMR financial stakeholders have voted overwhelmingly in support of the merger and the EU approved the merger. We always expected U.S. regulatory approval to be the final hurdle to clear.

We and our counterparts at US Airways have been working with the DOJ staff for months to ensure that they had an informed view of the merger. We have maintained that the merger is complementary (only 12 overlapping routes), that it provides significant customer benefits and that it enhances competition in the airline industry.

Since the DOJ has formed a contrary view, the matter will now be settled by the courts. The DOJ has filed a lawsuit in federal district court to enjoin the proposed merger. We and US Airways will vigorously defend our position. While we do not yet know how long the court process will run, it will likely take a few months.

In the meantime, American and US Airways will continue to operate as independent companies and competitors. All recent leadership announcements for the new merged American will be on hold until such time as the merger receives final clearance.

Throughout this restructuring, the people of American have stayed focused on caring for our customers day in and day out. And the results speak for themselves. American is again strong, profitable and competitive as evidenced by our record-setting second quarter results. As we work through the court process to clear our merger, let’s keep building the momentum of the new American.

Thanks for all you do.

Tom

 

[SparrowHawk]

Typical reaction from the Meddling Maggots of Money Manipulation in Washington. This is just another manufactured distraction to deflect from the Failure of the Obama Regime to even manage the organization of a one car funeral successfully.

 

[freedom]

Typical reaction from the Meddling Maggots of Money Manipulation in Washington. This is just another manufactured distraction to deflect from the Failure of the Obama Regime to even manage the organization of a one car funeral successfully.

You would think D.C would be understanding of the fact that we're trying to build a more stable company ... I mean come on D.C you've got to spend 85 Billion dollars a month just to keep the economy from collapsing and yet you can't see why our two companies would desperately want to merge in order to become stronger ?

 

[WorldTraveler]

As much as fighting it might be the "right" thing to do, don't underestimate the managerial focus doing so will require = at the potential cost of other strategic options.
There are many companies that come to the realization that their best financial future might come by pursuing a less risky strategy.

LCC's board and AMR's creditors will have to decide if it is really worth an extended fight with the government to fight for a merger that still might not be approved with conditions that would make the deal unworkable.

I think this will become one of those watershed moments in the history of the US airline industry.

 

[freedom]

This will either make us , or it will break us ...........

Far too many fellow employee's are at this moment giving in to despair ....

Now is not the time to surrender to hopelessness ....

 

[Real tired]

This will either make us , or it will break us ...........

Far too many fellow employee's are at this moment giving in to despair ....

Now is not the time to surrender to hopelessness ....

Sometimes in times of hopelessness, people say stupid things:

http://www.latimes.com/business/money/la-fi-mo-justice-department-us-airways-internal-messages-20130813,0,4594941.story

 

[traderjake]

As much as fighting it might be the "right" thing to do, don't underestimate the managerial focus doing so will require = at the potential cost of other strategic options.
There are many companies that come to the realization that their best financial future might come by pursuing a less risky strategy.

LCC's board and AMR's creditors will have to decide if it is really worth an extended fight with the government to fight for a merger that still might not be approved with conditions that would make the deal unworkable.

I think this will become one of those watershed moments in the history of the US airline industry.

There are only 12 over lapping routes.

A big enough campaign contribution to Obama should take care of this.

 

[WorldTraveler]

the more of the DOJ's case that becomes public, the harder it is to argue that they weren't doing exactly what they are supposed to do. There was clear documentation at both AA and US about reducing competition and raising prices; even if that was going to happen, you don't put it in writing - and there is documentation supporting that viewpoint of what would happen in consolidation that goes back many years.

Parker eliminated his chances for the merger.


On a rival's aggressive maneuvers to compete:

In 2010, a competing, unnamed airline extended a "triple miles" promotion, which set off a chain of emails within US Airways, according to the complaint. The lawsuit also said that the airline was expanding service.

According to the complaint, Parker sent an email to other senior executives about how to counter that rival airline's maneuvers:

They "are hurting [the rival airline’s] profitability – and unfortunately everyone else’s,” he wrote.

Those executives exchanged several emails debating how to get the attention of the rival airline, including portraying "these guys as idiots to Wall Street and anyone else who’ll listen."

Eventually, Parker forwarded the email chain full of messages to the chief executive of the rival airline, the Justice Department said.




On ending US Airways' Advantage Fares program, which offers lower fares on some routes:

One of the major points raised in the Justice Department complaint is that US Airways had competed with American and other carriers on certain routes by offering discounted fares.

Under its Advantage Fares program, it offered cheaper fares but on routes that included at least one stop. Other carriers offered nonstop fares for those routes, but for much higher prices.

According to an October 2012 internal analysis cited in the complaint:

The Advantage Fares "program would have to be eliminated in a merger with American, as American’s large non-stop markets would now be susceptible to reactionary pricing from Delta and United," the analysis said.


http://www.latimes.c...0,4594941.story

and
On offering in-flight wireless Internet:

In a 2011 email exchange, one senior executive groused about the need to install in-flight wireless Internet.

He wrote: "[N]ext it will be more legroom. Then industry standard labor contracts. Then better wines. Then the ability to book on Facebook. Penultimately, television commercials..."

US Airways Chief Executive Doug Parker wrote back: "Easy now. Consolidation will help stop much of the stupid stuff but inflight internet is not one of them."

 

[traderjake]

You left out

Would cut into Delta's profit.

 

[WorldTraveler]

all of which should never have been put in emails. You did see that Parker actually sent an email about pricing to one of his competitors' execs, didn't you? The DOJ's case sounds more and more like the American/Braniff case from years ago about pricing collusion. It truly is mindnumbing the kind of stuff that was written and then unearthed.

 

[robbedagain]

either way though i would imagine it could of also happen as dl/nw co/ua and fl/wn were doing the similar with their mergers.. they after all were allowed to merge unscathed then they also approved the dl/us slot swap crap

 

[WorldTraveler]

sorry but those are highly inflammatory and incriminating things for a CEO to write, let alone one that is asking for a high profile merger to be approved. Other execs at other carriers might have said those kinds of things in the bathroom but they didn't put it in emails and then email it to their competitors' executives.

The slot swap was agreed to by DL and US and approved by the DOJ and DOT after a process that took over 2 years, far longer than it took for the DOJ to act on the AA/US merger request.

 

[freedom]

honestly I don't think those things are highly inflammable ... I think it sounds like the truth ...

America's economy can ONLY support so many major airlines , and I remember constantly hearing before we started down on the merger path that at least ONE major airline was going to have to go away before the industry would stabilize ...

 

[737823]

DP should give his buddies at the IAM a call:

http://youtu.be/tg3J27aucTc

They've been happy to facilitate prolonged concessions on his behalf, Im sure they would be happy to help.

Josh