wings396
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- Aug 20, 2002
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Too funny that you were wrong? Trying to portray that US sold its Tempe HDQ in order to Justify why AZ joined the whinefest?
U.S. government, two airlines say open to settling merger fight
- Thread starter traderjake
- Start date
robbedagain
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- Oct 13, 2003
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wt what i found interesting thru motley fool on the www.justplanenews.com web is an article that the doj may give the merger a blessings with few concessions as the doj has been unable to replace the people who have left and has had a hiring freeze and the article says the doj bill baer may just settle with some concessions and give the merger a blessing...
Crash Pad DCA
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Crash Pad DCA
Senior
https://www.azag.gov...erican-airlines
Attorney General Tom Horne Files Suit to Block Merger of U.S. Airways and American Airlines
Left Unchallenged, Travelers Would Likely Suffer from Less Competition Resulting in Higher Airfares
Response to Arizona Republic "Public Interest Ignored" Article
Phoenix, AZ (Tuesday, August 13, 2013) -- Attorney General Tom Horne today joined five states, the District of Columbia, and the U.S. Department of Justice in filing suit to block the pending merger between U.S. Airways and American Airlines.
Left unchallenged, the merger would create the largest world-wide air carrier, reduce the current number of “legacy” airlines (carriers that existed prior to the Airline Deregulation Act) in the U.S. from four to three, and reduce the number of major airlines from to five to four. If the merger in fact happens, the three remaining legacy airlines -- the combined U.S. Airways/American, United and Delta -- and low cost carrier Southwest Airlines, would account for more than 80 percent of domestic air travel, making fare and fee increases easier to achieve.
American and U.S. Airways compete directly on thousands of heavily traveled nonstop and connecting routes. If this merger is completed, consumers will likely see less competition and higher airfares because airlines will be able to cut service and raise prices with less fear of competitive responses from rivals.
US Airways has long been problematic for other legacy carriers’, including American’s, with its Advantage Fares program. Under that program, U.S. Airways aggressively reduces last-minute ticket prices on connecting routes that compete with other legacy airlines’ non-stop routes. The proposed merger would likely bring an end to that pricing strategy and increase nationwide ticket prices by hundreds of millions of dollars. The merged airline would also be inclined to adopt American’s higher ancillary fee schedules (such as checked bag fees and ticket change fees), potentially costing consumers an additional $280 million each year.
“Competition is crucial for a vital economy” said Horne. “As the state’s chief legal officer, it is my duty to maintain competitive markets in Arizona for the benefit of our citizens. This merger is anticompetitive and Arizona consumers will be forced to pay millions of dollars more each year in increased airfare if it goes through as planned.”
History has shown that when competition shrinks in the airline industry, coordination by the remaining airlines becomes easier. Before 2008, there were six legacy airlines. Although the proponents of the last few airline mergers promised they would cut costs for passengers, those savings never materialized. Instead, the major airlines have followed each other in raising fares, imposing new fees on travelers, reducing services, and downgrading amenities.
American Airlines entered bankruptcy with plans to restructure and remain independent, adopting a standalone business plan designed to “restore American to industry leadership, profitability, and growth.” The airline, which is still in bankruptcy, is claiming the merger is necessary for survival, when it is not. In fact, American is now on a path to compete independently as a profitable airline; with its most recent quarterly results showing a record-high $5.6 billion in revenues, with $357 million in profits.
The other states joining in the lawsuit include Florida, Pennsylvania, Tennessee, Texas and Virginia. The District of Columbia has also joined the suit.
WorldTraveler
Corn Field
- Dec 5, 2003
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given that the sequester started months before the DOJ filed suit against AA/US, it is doubtful they will back down now on that basis. further, the trial - if it happens - will take place in the next fiscal year. If the DOJ has to use lots of resources to win the case, they will use more resources in the early part of the fiscal year and then figure out how to pay for the shortage later on.
There are some people saying that there are settlement talks underway and the chance of the case going to trial is diminishing.
Reed Richards
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I read the DOJ complaint as much more than an "extra" 18 slots at DCA divested (for a total of 28, or 10%) Is that really the issue here? The best observation made here is that the trial will mess with the happy Thanksgiving celebrations of government employees. That is one of the most compelling cases made on this forum for a settlement. But I remain negative. RR
WorldTraveler
Corn Field
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yes, the slots are only part of the problem. as has been noted, there are other issues including consolidation of the industry and comments by AA and US execs that will result in some sort of behavioral solution. The slot issue is the easiest to speculate about which is why I guess it gets discussed so much.....
Remember that the judge is a federal worker and she chose the date of the trial.
The point of filing a suit is often to force a settlement after initial discussions didn't produce the movement that the DOJ wanted. If the DOJ really requested almost 3X more slots than Parker was willing to offer and if there really are talks now - and who knows what other items - then the DOJ has succeeded in forcing negotiations.
I strongly suspect the case will never go to trial and the settlement will be a lot closer to what the DOJ wanted and lot less what Parker was willing to offer - but we will never know what those talks involved before the suit was filed.
Remember that the judge is a federal worker and she chose the date of the trial.
The point of filing a suit is often to force a settlement after initial discussions didn't produce the movement that the DOJ wanted. If the DOJ really requested almost 3X more slots than Parker was willing to offer and if there really are talks now - and who knows what other items - then the DOJ has succeeded in forcing negotiations.
I strongly suspect the case will never go to trial and the settlement will be a lot closer to what the DOJ wanted and lot less what Parker was willing to offer - but we will never know what those talks involved before the suit was filed.
USA320Pilot
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I do not know if it's true or not, but I'm hearing 18-20 DCA slots divested could be the negotiated settlement for the Structural Remedy, if obtained, but who knows the end result.
In addition, the slot divesture amount could be adjusted based on the behavioral remedies: Advantage Fares, no additional ancillary fees unless matching, no increase of fares unless matching, and no markets eliminated (especially out of DCA), all for a period of time. Sounds like a form of regulation to me...
Some of the reasons pointing to a settlement are:
- November 25th trial, which is 13 days closer to the airlines' November 12th desire, which will expedite the process with the trial likely complete before either airline can walk away from the deal on December 13th.
- The Justice Department, AMR, and US Airways filing a joint brief in federal court that they're open to settling the case, that Justice will file an amended complaint on September 6th, and the airlines fill file their reply brief on September 10th, which is 2 days before the Bankruptcy Court will consider confirming AMR's POR with an amended antitrust complaint.
- Eric Holder has indicted that the DOJ will likely run out of options by October 1, 2014 to prevent employee furloughs because of the 2011 budge cuts, hiring freeze and sequester. DOJ lawyers will be under a lot of pressure due to short-staffing prepare for trial. In fact, employment is so bad that the DOJ is seeking "special attorneys" for one-year unpaid positions! Who’s going to work for free? Will the DOJ have to scramble to prepare their case and will the feds be forced to cut corners due to staffing limitations?
- The inconsistent policy argument and the DOJ totally discounting the largest domestic passenger airline in the U.S.
- The DOJ having to prove that if US Airways and American merge they will have a monopoly and other companies like United, Delta, Southwest, JetBlue, Spirit and others will be unable to compete.
- Considering the DOJ has one of one lawsuit since 2004 do the reasons above increase or decrease the odds of a negotiated settlement?
Will US Airways and American Airlines merge? Maybe, maybe not, but I believe there are a lot of signs pointing to a negotiated settlement and a corporate combination.
USA320Pilot
Reed Richards
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I hear you. I was trying to figure out a way to just donate 75% of my 401k and 90% of my retirement to "somebody." History always repeats! Best, RR
nycbusdriver
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There will be a UCT (Unique Corporate Transaction) between the Ft. Worth-based carrier and the Tempe-based carrier before November 25.
Dry heaving now?
robbedagain
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and enjoy!!! USA320Pilot
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DCA is only the Structural Remedy. The majority of the DOJ's broad-based and less defined complaint is about Behavioral issues. I believe people are focusing too much on a potential Structural Remedy and not discussing what may need to be done with the Behavioral piece.
USA320Pilot
USA320Pilot
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Four the past four trading US Airways' security has had a positive "gap open" with bullish sentiment, bullish technical indicators, and a percentage increase greater than DAL and UAL.
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See chart: http://finance.yahoo.com/echarts?s=LCC+Interactive#symbol=lcc;range=5d;compare=dal+ual;indicator=sma+volume+stochasticfast;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=undefined;[/background]
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USA320Pilot[/background]
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