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The Deal: DOJ Pushes Back Against Call for Speedy Airline Trial

Tickers in this article: AAMRQ LCC

WASHINGTON (The Deal) -- The Department of Justice on Tuesday, Aug. 27, urged a federal judge to ground the request of US Airways and American Airlines for a quick trial to decide the federal government's attempt to stop the air carriers' $11 billion merger.

The DOJ, joined by attorneys general from six states and the District of Columbia, urged Judge Colleen Kollar-Kotelly of the U.S. District Court in Washington to begin the trial on March 3, 2014, rather than Nov. 12 as the airlines requested last week.

"Defendants' attempt to rush this matter to a trial on the merits in fewer than 75 days following the initial scheduling conference creates the very real risk that ... one of the largest merger challenges ever adjudicated will be resolved on less than an appropriate record," the government said in court papers.

The airlines must respond to the DOJ's proposed timeline by the end of the day Wednesday. Judge Kollar-Kotelly will hold a scheduling conference to set the trial date and briefing schedule Friday morning.

The DOJ's trial team, led by antitrust division litigation director Mark Ryan, dismissed the airlines' contention that a quick trial is necessary in order to provide clarity to the ongoing effort to bring American's parent, AMR Corp., out of bankruptcy. AMR's current reorganization plan is based on being acquired by US Air.

"American's ongoing bankruptcy proceedings do not justify trying this case on an incomplete record," the DOJ said. Government attorneys noted that AMR is capable of emerging from Chapter 11 in solid financial shape without being acquired. "American's restructuring efforts have been extraordinarily successful and have positioned the company to compete as a strong and vibrant standalone firm," the DOJ said. The government stressed that American reported record profits in the second quarter of this year and on Monday announced that July 2013 was AMR's most profitable month in company history.

The government also disputed the companies' contention that beginning the trial well into the first quarter of 2014 would constitute an unprecedented delay in bringing a merger case to trial.