American Airlines and US Airways fired back at the U.S. Justice Department in a new court filing, saying federal antitrust regulators fail to understand the current realities of industry and competition.
"The plaintiffs (Justice Department) seem to be nostalgic for certain elements of this history that seem to provide consumer benefits, while ignoring or downplaying other elements that do not fit their preferred narrative," a filing from American parent AMR Corp. reads.
The filings are American's and US Airways' first legal response to the lawsuit filed on Aug. 13 seeking to block the merger. The lawsuit has already delayed American's bankruptcy suit and put on hold the merger between the two airlines, which was expected to already be completed.
The U.S. Justice Department, joined by seven states and the District of Columbia, are suing American parent AMR Corp. and US Airways to block the merger, arguing the tie-up would reduce competition and hurt consumers. U.S. District Judge Colleen Kollar-Kotelly has scheduled the case to go to trial beginning Nov. 25.
The Justice Department wants to shut down the merger entirely, claiming that years of airline consolidation has shrunk competition too much. They say that the merger would significantly increase fares on more than 1,000 routes in essentially every market served by the two airlines.
"We believe this merger would result in consumers paying more for airfares and receiving less service," Gina Talamona, a spokeswoman for the Justice Department's antitrust division, said in an email to Bloomberg News. "The department's lawsuit seeks to maintain competition in the airline industry."
During the past 12 years, American lost $10.3 billion and US Airways lost $3.4 billion, according to the filing by US Airways. US Airways has been in bankruptcy twice in that period.
"Blocking the merger will not sharpen competition - it will prolong this cycle of crisis to the detriment of passengers, the employees of American and US Airways, and the communities the airlines serve," US Airways said.
The airlines continued to claim that the merger of the country's fourth- and fifth-largest airlines is necessary to compete with legacy giants United and Delta, which have both grown through consolidations.
The filing from US Airways and American Airlines attempts to pick apart the Justice Department's case piece by piece, including federal claims that U.S. Airways would eliminate its Advantage Fares program, which gives flyers a discount for choosing nondirect routes.
But mostly the airlines hang their argument on their current position as smaller competitors to United and Delta, saying that a larger airline is needed to effectively compete. They contend that the combination would generate more than $500 million a year in benefits to consumers.
"This transaction would create a third comprehensive, global network carrier (the "New American"), fully capable of competing with the two that exist today ..." the AMR Corp. response reads.
Late Tuesday, the Wall Street Journal reported that US Airways will ask its board to extend a Dec. 13 deadline. The terms of the merger allowed either airline to terminate the deal if the two airlines hadn't combined by Dec. 13, 2013.
On Thursday, the judge in AMR's bankruptcy case will hold a hearing where he will again consider American's plan of reorganization. At a hearing on Aug. 29, Judge Sean Lane said he was considering approving the reorganization plan, even with the uncertainty of the antitrust lawsuit.
Bloomberg News contributed to this report.
Kyle Arnold 918-581-8380
kyle.arnold@tulsaworld.com
Original Print Headline: Airlines: Antitrust suit defies realities
Complete coverage of American Airlines
Find all the stories, photos, videos and a timeline about Tulsa’s largest employer.
American Airlines
Some travelers will encounter the most tangible evidence of the reboot of American Airlines on Monday when the airline begins flying its first Airbus A319 jets.
The American Airlines bankruptcy judge issued a written opinion Friday stating that he took the financial sacrifices made by union members into account when rejecting a $20 million severance deal for CEO Tom Horton.
