The Deal: An Unscheduled Departure
Tempe, Ariz.-based US Airways secured a deal with the bankrupt parent of American Airlines in February after more than a year of pushback from AMR management. With initial smooth flying, the deal appeared to be on its way to forming a third truly national U.S. air carrier network. The merger had the backing of labor and quickly won AMR creditor support. But it was thrown into doubt last month when the DOJ went to court to try to block it on antitrust grounds.
Few saw the DOJ action coming, and the weeks since have provided no shortage of twists and turns. But the consensus among an overwhelming majority of industry watchers on what happens next is remarkably clear. In nearly all analyst reports, social media posts, newspaper columns and television appearances, they predict the airlines and the DOJ will settle the case, allowing the deal to eventually proceed.
That consensus among airline industry players, however, contrasts markedly with the opinions of antitrust experts who have represented merging clients before the DOJ and litigated merger cases. They are decidedly more skeptical. These observers contend that while some of the DOJ allegations might lend themselves to a settlement, the core of the DOJ's case -- that the merger would increase the likelihood of coordinated behavior among remaining network airlines, leading to higher fares and fees and reductions in service -- does not suggest an obvious settlement.
For their part, neither the government nor the airlines are saying anything beyond the conventional boilerplate in their court filings that they are willing to consider a settlement if the other side presents the right deal.
"Any discussions about settlement to resolve this litigation, whether internal, with DOJ directly or through the mediator, would be private and we are not going to comment on them in any way," a spokesman for the airlines said.