American Airlines, US Airways Vow To Fight For Merger

Aug. 15--The legal team for American Airlines and US Airways says it has no intention of offering concessions to the Department of Justice and will fight for the carriers' merger plan.

"We are looking forward to our day in court and our opportunity to demonstrate that this is a pro-competitive merger," Rich Parker, an antitrust lawyer hired by the airlines, said during a conference call Wednesday. "What we are saying today is that they got this one wrong, they got this one very wrong."

The Justice Department sued the two airlines Tuesday to stop their pending merger on grounds that consumers would have fewer flight options and face higher prices after a major competitor disappears from the market.

The government's lawsuit came two days before American Airlines is scheduled to go before a bankruptcy judge to argue that it is ready to complete its reorganization. That hearing is still scheduled for Thursday morning in New York before U.S. Bankruptcy Judge Sean Lane.

"The DOJ has a strong preference to sue before a transaction is closed," said Paul Denis, a lawyer for US Airways. "It is not a secret that the bankruptcy confirmation hearing was scheduled for the 15th."

However, airline lawyers said they were confident that the merger will occur, whether the case is taken to trial or solved through a settlement.

"If there is a settlement that means the merger goes forward," Denis said.

The judge in the DOJ lawsuit, U.S. District Judge Colleen Kollar-Kotelly, has not determined a trial date, but Parker said they hope to be in court before the end of the year.

Kollar-Kotelly oversaw an antitrust case against Microsoft Corp. in 2001. Microsoft eventually settled with the Justice Department.

American Airlines officials are arguing that a merger between the nation's fourth and fifth largest carriers would only enhance service and cut prices, giving the new American Airlines a chance to compete with larger rivals such United, Delta and Southwest.

"All the government has done here is lay down a marker," said Joe Sims, a lawyer on the case for American Airlines. "They have to prove that this merger is anti-competitive."

Antitrust regulators are arguing that the merger would hurt consumers in hundreds of markets where American Airlines and US Airways currently compete for travelers.

Officials for the airlines contend the two companies compete on only 12 non-stop flights throughout the country, mostly in markets served by several airlines.

The Justice Department also argues that the combined airline would be too dominant at Reagan National Airport near Washington, D.C., but lawyers for the airlines said federal officials would have to approach them with any out-of-court solutions to the matter.

William Baer, the Justice Department's assistant attorney for antitrust matters, said he preferred to see the case taken to court and that federal officials will not be the first party to propose settlement terms.

The two companies had hoped to close the merger by the end of September, but the lawsuit likely will put the combination on hold for at least a few months.

The lawsuit threatens to unravel 20 months of bankruptcy reorganization for American Airlines and a merger to form the world's largest airline with 100,000 employees. About 6,300 of those workers are in Tulsa, mainly at American's primary maintenance base at Tulsa International Airport.

Kyle Arnold 918-581-8380

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