American Airlines, US Airways Extend Merger Deadline to January

Sept. 24--American Airlines and US Airways announced Monday they will extend their merger deadline into January, giving the companies more time as they face an antitrust challenge from the U.S. Department of Justice.

The extension pushes the date that either airline could abandon the merger from Dec. 17 to Jan. 18.

"The boards and management teams of AMR and US Airways remain committed to completing this combination to create the new American, and the extension of this outside date is a reflection of this commitment," said AMR Corp. CEO and President Tom Horton and Doug Parker, CEO and president of US Airways, in a joint statement. "Our focus is on mounting a vigorous defense and winning our court case so the new American can enhance competition, provide better service to our customers and create more opportunities for our employees."

The airlines' antitrust trial is slated to begin Nov. 25. A Dec. 17 deadline would give only 16 business days between the beginning of the trial and the merger deadline, so there might be a verdict by then.

The antitrust trial is expected to take about two weeks.

The revised agreement would also allow the airlines a timeline to abandon the merger if the judge strikes down the deal.

The Justice Department is seeking to derail the merger, contending the airline industry has become too concentrated and that a combination of American Airlines and US Airways would increase fares on hundreds of routes across the country.

American Airlines' main maintenance base is in Tulsa, where it employs the bulk of the area's AMR Corp. employees.

The two airlines have been working toward a merger since Feb. 14, first getting bankruptcy court approval. European authorities have already granted antitrust approval to the deal.

The airlines have been putting pressure on the Justice Department to settle the case before the trial date. Last week, the companies flew employees to Washington, D.C., to lobby lawmakers, who in turn could put political pressure on the White House to end the antitrust challenge.

The airlines argue that other airline mergers were allowed to go forward and that their merger would create a stronger competitor to bigger rivals United Airlines and Delta Air Lines.

American and US Airways also confirmed that they dropped an agreement to pay Horton nearly $20 million in severance. If the merger is completed, he would step aside soon afterward while Parker runs the combined company.

The judge in AMR's bankruptcy case ruled this month that the payment to Horton would violate bankruptcy law.

 

Antitrust timeline

Aug. 13: Department of Justice files lawsuit against American Airlines and US Airways merger plan

Aug. 30: Judge sets Nov. 25 date for trial, much earlier than Justice Department's request of March

Sept. 12: Judge approves American Airlines bankruptcy plan

Sept. 18: American Airlines rallies employees in Washington, D.C., against antitrust lawsuit

Nov. 25: First scheduled day of trial in antitrust case

Jan. 18: Airlines can abandon merger if antitrust law suit isn't settled

 

The Associated Press contributed to this story.

 

Kyle Arnold 918-581-8380

kyle.arnold@tulsaworld.com

 

 

Copyright 2013 - Tulsa World, Okla.

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