US and AA Not such a sure thing it seems [US DoJ opposing Merger]

[burmans]

Re: The Merger is not almost certainly Dead in the Water!

IMO the DoJ's assumption that non-legacy carriers wouldn't grow post a US-AA merger and that they are not "real" competition is curious.

The DoJ mindset is an anachronism. Look at how the domestic industry has changed here in Australia (with just meagre amounts of competition and one legacy airline collapse). We now have an industry generally committed to the consumer convenience of - point to point flying (on major city pairs), simplified one way pricing (with no ancient Saturday night restrictions, and allowing mix-n-match carrier round trips) and some degree of market differentiation based on customer types rather than simply by network focus cities or how many olives they serve in first class.

To judge the likes of Southwest and JetBlue based solely on their current route structure, and not their potential post merger expansion is a flaw.

While the assumption that Southwest and JetBlue wont grow is clearly an assumption that can be questioned, the assumption they will fill this gap is equally fraught IMO. Can't profess to understand the intracacies of the American legal system but given the DOJ are the incumbent regulator would have thought that US/AA will have the job of pushing their case that competition is not impacted more than DOJ need to prove theirs.

 

[dk4]

Re: The Merger is not almost certainly Dead in the Water!

... would have thought that US/AA will have the job of pushing their case that competition is not impacted ...

I agree, but I think that the outcome is more likely negotiated compromise, rather than complete collapse. (Alpha Male CEO egos / management styles, not withstanding.)

 

[FlyboyAl]

Re: The Merger is not almost certainly Dead in the Water!

Local media over here seems reasonably convinced it will go ahead. Generalisations are better deal for the traveling public, and survival of the 2 airlines. At least was what I heard today driving back to the hotel.

 

[burmans]

Re: The Merger is not almost certainly Dead in the Water!

I agree, but I think that the outcome is more likely negotiated compromise, rather than complete collapse. (Alpha Male CEO egos / management styles, not withstanding.)

Yes, thats certainly what US/AA are hoping anyway, guess only time will tell!

 

[Danger]

Re: The Merger is not almost certainly Dead in the Water!

US Department of Justice Gets a Cranky Jackass Award for Its Lawsuit to Stop the US Airways/American Merger - >> The Cranky Flier

 

[docjames]

Re: The Merger is not almost certainly Dead in the Water!

More discussion here:

http://crankyflier.com/2013/08/14/u...campaign=Feed:+CrankyFlier+(The+Cranky+Flier)

 

[serfty]

Re: The Merger is almost certainly Dead in the Water!

It seems that AA may be able to walk away from the Merger if not confirmed by December 13th. Their management was basically dragged "to the alter" by AA creditors who perceived they may get something back with an US Merger.

However, until then they must work with US with their efforts to get the merger consummated.

The DoJ is looking to trial in February but last evening US and AA are looking to trial in November.

PR: American Airlines | Investor Relations | News Release

American Airlines And US Airways File Motion To Set Trial For Nov. 12, 2013

Airlines Seek Their Day in Court to Demonstrate Pro-Competitive Outcomes of Planned Merger

FORT WORTH, Texas and TEMPE, Ariz., Aug. 22, 2013 /PRNewswire/ -- AMR Corporation (OTCQB: AAMRQ), the parent company of American Airlines, Inc., and US Airways Group, Inc. (NYSE: LCC) today announced that they filed a motion to set a trial date and a supporting brief in the United States District Court for the District Of Columbia in connection with the lawsuit filed by the U.S. Department of Justice ("DOJ") regarding the merger of the two airlines. In the motion, American Airlines and US Airways have requested a Nov. 12, 2013 trial date.

"We strongly believe in the significant benefits the merger of American Airlines and US Airways will deliver to consumers, communities and employees," said Tom Horton, AMR's Chairman, President and CEO, and incoming Chairman of the Board of the new American Airlines. "The people of American Airlines have worked extremely hard over the past two years to lead our company through a remarkable and successful restructuring and turnaround. After all of their contributions, we are ready to move forward with this merger. We look forward to beginning this trial in November so we can complete our journey toward building the new American and deliver on the promise of this merger."

In their filing, the Companies explain that their proposed trial date is very reasonable by recent historical standards. The DOJ request for 180 days, especially with one of the parties in bankruptcy, however, would be unprecedented and unreasonable in the circumstances. Based on the DOJ merger cases litigated to a decision since 2001, the average time from the DOJ's complaint to trial is 70 days.

"We are eager to show that the DOJ's action would deny millions of customers access to a more competitive airline that will offer customers what they want, delivering significant benefits to consumers, communities and employees," said Doug Parker, Chairman and CEO, US Airways, incoming CEO of the combined company. "The new American Airlines is predicated on growth. This merger is the foundation of American's plan to exit bankruptcy and is the cornerstone of American's and US Airways' plan to form a more competitive and cost-effective airline to take on the country's largest air carriers – Delta, United Airlines, and Southwest – and a number of fast-growing low-cost carriers, including Virgin America, JetBlue, Spirit, and Allegiant. We are committed to resolving this litigation and, if necessary, will pursue all legal options in order to achieve this merger."

 

[serfty]

Re: The Merger is not almost certainly Dead in the Water!

It seems that AA may be able to walk away from the Merger if not confirmed by December 13th. Their management was basically dragged "to the alter" by AA creditors who perceived they may get something back with an US Merger.

However, until then they must work with US with their efforts to get the merger consummated.

The DoJ is looking to trial in February but last evening US and AA are looking to trial in November.

PR: American Airlines | Investor Relations | News Release

Also of note: from H. Termination,

§62:

The Merger Agreement may be terminated under the following circumstances:

• Termination by Mutual Consent. The Merger Agreement may be terminated at any time prior to the Effective Time, whether before or after receipt of US Airways stockholder approval or the entry of the Confirmation Order, by mutual written consent of AMR and US Airways. (Merger Agreement § 6.1.)
• Termination by Either AMR or US Airways. The Merger Agreement may be terminated by AMR or US Airways at any time prior to the Effective Time if any of the following events occur, so long as the terminating party did not breach the Merger Agreement in a manner that shall have been the principal contributing factor to the occurrence of termination event:
  • the Merger has not been consummated by October 14, 2013, which may be extended under certain circumstances to a date not beyond December 13, 2013;
  • the US Airways Stockholder Approval is not obtained at the Stockholders Meeting;
  • the Bankruptcy Court enters an order denying confirmation of the Plan and twenty days have elapsed after the entry of such order;
  • an order granting this Motion is not entered by the 90th day following the execution date of the Merger Agreement; or
  • an order permanently restraining, enjoining, or otherwise prohibiting consummation of the Merger is entered and has become final and non-appealable. (Id. § 6.2)

​

Although outside the legal world, I would suggest the DOJ lawsuit would come under the realm of "an order permanently restraining, enjoining, or otherwise prohibiting consummation of the Merger".

The agreement calls for the transaction to be completed by 10/14/2013, and if extended, can only be extended until 12/13/2013 before either AMR or LCC can terminate the agreement without penalty.

If this is a real deadline, it might explain why Parker is pushing so hard to get his "day in court" as AMR could back out without penalty if they the merger is not confirmed by then.

The Merger Agreement contains certain termination rights for AMR and US Airways, and further provides that, upon termination of the Merger Agreement under specified circumstances, (i) AMR may be required to pay US Airways a termination fee of $135 million in the event it terminates the agreement to enter into a superior proposal and $195 million if US Airways terminates the Merger Agreement in the event of a knowing and deliberate breach of the Merger Agreement by AMR and (ii) US Airways may be required to pay AMR a termination fee of $55 million in the event it terminates the agreement to enter into a superior proposal and $195 million if AMR terminates the Merger Agreement in the event of a knowing and deliberate breach of the Merger Agreement by US Airways.

 

[cove]

Re: The Merger is not almost certainly Dead in the Water!

Total uncertainty prevails thanks to the Dept of Justice.

 

[burmans]

Re: The Merger is not almost certainly Dead in the Water!

US Department of Justice Gets a Cranky Jackass Award for Its Lawsuit to Stop the US Airways/American Merger - >> The Cranky Flier

While clearly Cranky Flier is dead against it (and I have bookmarked his page so see some value in his opinion on the matter) there are plenty of others who hold the opinion the DOJ suit is strong. Not being a lawyer myself and not being an American with a strong political opinion on the matter (difficult to shake the feeling many of those writing work backwards from their politics to their view rather than vice-versa in this case) at this stage I have no clue how this will go other than it will slow down any merger considerably and the merger is by no means a given.

 

[smit0847]

Re: The Merger is not almost certainly Dead in the Water!

DOJ: November trial date in US Airways-American Airlines antitrust case would rush things, so let

If the merger goes ahead at all it may be delayed until at least March next year.

 

[serfty]

Re: The Merger is almost certainly Dead in the Water!

DOJ: November trial date in US Airways-American Airlines antitrust case would rush things, so let


If the merger goes ahead at all it may be delayed until at least March next year.

The Merger Partners are to submit their response to that on Wednesday,

Interestingly, US moved their JFK flights to T8 today: US Airways to Move to American

Of course, AA (or US) can walk away from any merger on December 13th.

Interesting FT Post:
Quote:[TABLE="class: outer_border"]
[TR]
[TD] Originally Posted by spin88
....including that the documents - 3M pages of them - were delivered in "early may" (so no extension on the December 13, 2013 deadline).

Anyone who thinks the court is going to set a quick trial, should read what DOJ filed. If you have any understanding of the law, you will know that this trial will happen in March 2014, if at all...

http://aviationblog.dallasnews.com/2...ml/#more-17036

and re that December 13, 2013 deadline, here is what DOJ said:

"Further, any claim of urgency based on the December 13, 2013 merger agreement termination date that Defendants negotiated between themselves should carry little weight. They can change this self-imposed deadline with the stroke of a pen. Indeed, Defendants do not claim that the transaction will be abandoned after December 13; they state only that they “will have the right to terminate the transaction at any time after that date.” Def. Mem. at 7. Faced with similar arguments, the Court of Appeals explained:

[A]lthough the appellees state that if an injunction pending appeal is granted they may abandon the merger, they do not unequivocally state that they will do so. . . . Moreover, even if the current merger plans were abandoned, the evidence does not establish that the efficiencies the appellees urge could not be reclaimed by a renewed transaction following success on appeal.

FTC v. Heinz, 2000 WL 1741320, at *2 (D.C. Cir.) (emphasis in original)."
[/TD]
[/TR]
[/TABLE]

 

[hossein_au]

Re: The Merger is almost certainly Dead in the Water!

[h=1]Date Set For American-US Air Merger Trial[/h]

August 30, 2013


A federal judge on Friday set a tentative November 25 trial date for the US government's legal challenge to the merger of American Airlines and US Airways.
Judge Colleen Kollar-Kotelly, who will try the case without a jury, announced the date at a hearing in US district court.
The US Justice Department had asked for a March trial. The airlines had been pushing for November because holding a deal together for months puts a strain on the parties. During the merger review and challenge process, the companies said they are essentially in limbo, unable to merge but unable to make independent long-range plans.
"March 3, I think, is too far off. It needs to be a tighter, expedited schedule," the judge said in court.


​

read the full story on: Date Set For American-US Air Merger Trial

 

[burmans]

Re: The Merger is almost certainly Dead in the Water!

Date Set For American-US Air Merger Trial

August 30, 2013


A federal judge on Friday set a tentative November 25 trial date for the US government's legal challenge to the merger of American Airlines and US Airways.
Judge Colleen Kollar-Kotelly, who will try the case without a jury, announced the date at a hearing in US district court.
The US Justice Department had asked for a March trial. The airlines had been pushing for November because holding a deal together for months puts a strain on the parties. During the merger review and challenge process, the companies said they are essentially in limbo, unable to merge but unable to make independent long-range plans.
"March 3, I think, is too far off. It needs to be a tighter, expedited schedule," the judge said in court.


​

read the full story on: Date Set For American-US Air Merger Trial

Yes, but of course this is a) on a target date so if could still slip beyond end November to start and b) the start of the trial is still only by definition the start, the trial itself could take months and go well beyond that Dec 13th date. So I'm absolutely not expecting this to be resolved before the end of the year and thats just a decsion they can merge its not suddenly merger complete.

 

[hossein_au]

Re: The Merger is almost certainly Dead in the Water!

Yes, but of course this is a) on a target date so if could still slip beyond end November to start and b) the start of the trial is still only by definition the start, the trial itself could take months and go well beyond that Dec 13th date. So I'm absolutely not expecting this to be resolved before the end of the year and thats just a decsion they can merge its not suddenly merger complete.

I was merely conveying the message. Personally, I haven't yet decided which result I'll like the most: 1) USDM becoming 1World, or 2) USDM staying *A. Each scenario has pros and cons... oh, well, such is life

 

[serfty]

Re: The Merger is almost certainly Dead in the Water!

The Date is 'tentative' and requires the party's to undertake 'discovery' in the mean time with the normal 30 response limits removed.

If for example US makes the expedited 'discovery' difficult, the Judge would likely set a later date.

 

[serfty]

DOJ and (now eight) state Attorney Generals have submitted and amended complaint (one day before it was due) but little changed from the original and the list is slightly, but inconsequentially, different.

The summary of the complaint is as follows:

... the plaintiffs allege that as a result of the merger:

(a) actual and potential competition between US Airways and American Airlines would be eliminated;

(b) competition in general among network airlines would be lessened substantially;

(c) ticket prices and ancillary fees would be higher than they otherwise would;

(d) industry capacity would be lower than it otherwise would;

(e) service would be lessened; and

(f) the availability of slots at Reagan National would be significantly impaired.

Published schedules for expedited trial dates:

Originally Posted by hillrider
Pretrial proposed dates and mediator choice available at http://aviationblog.dallasnews.com/2...eadlines.html/

Here it is from Terry Maxon's article:

Amended Complaint to be filed Sept. 6
Responses to Complaint due Sept. 10
Exchange Preliminary Witness Lists Sept. 30
Status Hearing (Parties’ joint submission due Sept. 30, noon) 10:30 a.m. Oct. 1
Close of Fact Discovery Oct. 25
Plaintiffs’ Expert Disclosures Oct. 25
Final Deadline for Requests for Admissions to be served Oct. 30
Defendants’ Expert Disclosures Nov. 8
Supplemental and/or Rebuttal Expert Reports Nov. 15
Close of Expert Discovery Nov. 20
Start of trial 9 a.m. Nov. 25​

As mediator/arbitrator Richard A. Levie was picked. His résumé is at JAMS Arbitration, Mediation, and ADR Services | Mediators/Arbitrators | Neutrals | Hon. Richard A. Levie (Ret.)

 

[serfty]

AA and US have submitted an amendment to the merger agreement, extending it until possible Jan 17, depending on events in relation to the upcoming trial.

The amendment to the merger agreement is EX-2.1

(Inserted Content from original agreement in Blue.)

1. Amendment to Section 6.2(a) of the Merger Agreement. Section 6.2(a) of the Merger Agreement is deleted and replaced in its entirety with the following:

[6.2 Termination by Either American or US Airways. This Agreement may be terminated and the Merger may be abandoned at any time prior to the Effective Time by duly authorized action of either American or US Airways if: ]

(a) either (i) the Merger shall not have been consummated by the later of (A) January 17, 2014 and (B) fourteen (14) days after the District Court (as defined below) enters an Order in the Trial (as defined below) in favor of American and US Airways, provided that such Order is entered on or prior to January 17, 2014, or (ii) five (5) days shall have elapsed after the United States District Court for the District of Columbia (the “District Court”) enters a final, but appealable, Order permanently restraining, enjoining or otherwise prohibiting consummation of the Merger following the trial in the proceeding captioned United States of America, et al. v. US Airways Group, Inc. and AMR Corporation (the “Trial”);

 

[serfty]

Interesting article

American Airlines Is Too Profitable for Its Own [merger] Good

...
American Airlines is announcing its quarterly earning results on Thursday. Most likely, they’ll post another quarter of profits following success in recent quarters in turning around the bankrupt company. Ordinarily, that would be cause for celebration. There’s more to life than quarterly profits, of course, but workers and managers at established businesses normally like the idea of profitability—except at American Airlines, where good financial results may do more harm than good.

That’s because American is trying to put itself out of business by merging with US Airways. But the Justice Department doesn’t want to let it, arguing that the merger will reduce competition and harm consumers. American’s strongest counterargument would be to show that it’s not viable as an independent company—an argument that strong quarterly earning results would badly undercut. ...