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Justice Department Sues to Block AMR-US Airways Merger

(Reuters) - The Justice Department sued on Tuesday to block the merger of American Airlines' parent company AMR Corp and US Airways Group Inc, saying the deal would hurt consumers by leading to higher fares and fees.

The $11 billion merger would create the world's largest airline. The civil antitrust lawsuit was filed in U.S. District Court for the District of Columbia.

The Justice Department was joined in its suit by several states, among them Arizona and Texas.

"The department sued to block this merger because it would eliminate competition between US Airways and American and put consumers at risk of higher prices and reduced service," Bill Baer, head of the Justice Department Antitrust Division, said in a statement.


US Airways Pilots Look to End Game in Seniority Dispute

CHARLOTTE, N.C. (TheStreet) -- A federal judge in Phoenix has set Sept. 24 for a hearing that likely will begin the end game in the eight-year old seniority dispute between the two pilot groups at US Airways.

Roslyn Silver, chief judge of the U.S. District Court in Phoenix, ordered the hearing in a case brought by pilots for the former America West, which merged with US Airways in 2005. The former AWA pilots allege that the U.S. Airlines Pilots Association, which represents the US Airways pilots, does not fairly represent them.

The pending merger with American Airlines means the time to resolve the dispute has arrived, Silver wrote last month, in her order setting the date.

Pilots from America West and pilots from the pre-merger US Airways, known as "the east," have never agreed on a seniority list. They agreed to binding arbitration, But in 2007 that process resulted in the controversial Nicolau ruling, which appeared to so strongly favor America West pilots that the pilot group, numerically dominated by east pilots, broke from the Air Line Pilots Association and created a new union, the U.S. Airline Pilots Association.

Since then, three cases have been filed in Phoenix and one has been heard by the Ninth Circuit Court of Appeals in San Francisco. Now the case is back in Phoenix, although the likelihood is that whoever loses there will appeal to the Ninth Circuit.


Parties File Objections to American Airlines Plan of Reorganization

By Terry Maxon, Dallas Morning News

One day after stakeholders finished voting on the American Airlines plan of reorganization, Tuesday marked the deadline for parties to file objections to the plan.

Here are summaries of a number of the objections, filed in advance of an Aug. 15 hearing by U.S. Bankruptcy Judge Sean Lane to consider confirming the plan:

1. The plaintiffs challenging the merger of US Airways and American Airlines on antitrust grounds want Lane to delay the hearing.

In a July 2 lawsuit filed in U.S. District Court in San Francisco, the plaintiffs alleged that the merger was anti-competitive and violated the Clayton Act. They asked Judge Lane to continue the hearing until they get a decision on their lawsuit, which they said would have a “normal turnaround time of anywhere between 90-180 days” as court scheduling would allow.


US Airways Shareholders Approve Merger With AMR

By Susan Carey, Wall Street Journal

American Airlines parent AMR Corp. and US Airways Group Inc. moved closer to merging Friday as US Airways shareholders voted to approve the combination that would give them a 28% stake in the world's largest carrier by traffic.

The $12.8 billion stock deal, announced in mid-February, is seen as the vehicle to take AMR out of bankruptcy-court protection, where the company landed in late 2011. AMR's creditors currently are voting on that plan of reorganization. If they approve it, a bankruptcy judge is expected to call a hearing on Aug. 15 to confirm the reorganization and merger.

The transaction still requires approval of antitrust regulators, however. The European Union has indicated it will render its decision later this month. The U.S. Department of Justice has been looking at the combination for six months, and has been joined in that review by numerous state attorneys general. AMR and US Airways have said they expect a green light and hope to close the transaction in the third quarter.

Doug Parker, US Airways' chief executive officer, said at Friday's shareholder meeting that 88% of the shares were voted in advance by proxy. Also approved by shareholders were a merger-related compensation plan for top executives and some more routine items, such as re-election of US Airways' auditors.


Source: US Airways, AMR Merger on Track Despite DOJ Depositions

By Jennifer Booton, FOX Business

Despite depositions by the U.S. Department of Justice related to the AMR and U.S. Airways (LCC) merger, the deal is still expected to close on time in the third quarter, two sources who asked not to be named told FOX Business on Friday.

The DOJ is taking depositions as part of a broader probe into the merger of American Airlines and US Airways, however sources say it is pretty typical for a merger of this size and shouldn’t knock the airlines off their scheduled timeline.

“It’s nothing more than part of the fact gathering the DOJ would do of any merger of this size,” one of the sources close to the dealings said, adding that it’s all part of an “ongoing process” and that the airlines remain in “constant communication” with the DOJ.

The combination will create the world’s largest carrier with a market value of roughly $11 billion. US Airways CEO Doug Parker, who testified in favor of the merger and softened antitrust concerns at a senate subcommittee hearing last week, will take the reins of the combined entity.


US Air President to Keep Same Job in American Merger

(Reuters) - American Airlines parent AMR Corp (AAMRQ.PK) and US Airways Group Inc (LCC.N), which are merging to create the world's largest carrier, said on Monday that Scott Kirby, president of US Airways, would hold the same job in the new company.

Derek Kerr, chief financial officer at US Air, would have that role at the new company, American Airlines Group, which would be based in Dallas-Fort Worth, Texas, the current AMR headquarters.

The merger is expected to close in the third quarter, pending various government approvals.

Others US Airways executives named as top managers: Elise Eberwein will head communications; Robert Isom, will be in charge of airline operations; and Stephen Johnson, will run corporate affairs.


American, US Airways Outline Plans as They Gear up for Merger

From Inside Tucson Business:

Officials at American Airlines and US Airways are continuing to gear up and drum up support for their proposed merger. There have been some issues raised about the concentration of flights the combined carrier would have but those are all back East and mainly have to do with Reagan National Airport in Washington, D.C.

That may require some divestitures of landing slots at the airport but otherwise, the airlines are moving along in anticipation of the merger getting the necessary regulatory amd legal approvals.

This month the two unions currently representing a majority of the ground employees at the two airlines said they had agreed to jointly bargain for their members in the merged airlines. There is still a wrinkle, though, in that the Transport Workers Union and International Association of Machinists and Aerospace Workers, both affiliated with the AFL-CIO, are facing a representation battle from the International Brotherhood of Teamsters, which says it has enough signatures to seek an election at US Airways and is almost there at American.

Be that as it may, reports from a US Airways corporate outing last month said executives were nearly giddy.

For Southern Arizona, the big question remains what the combined airline will do with what is now US Airways’ hub operation at Phoenix Sky Harbor International Airport. By several measures it is the most vulnerable of the hubs currently operated by each of the airlines because most of the connectivity it provides could be shifted to Dallas-Fort Worth or Los Angeles.


American Airlines, US Airways to Name Post-Merger Leadership within Weeks

By Terry Maxon, Dallas Morning News

The chief executive officers of American Airlines and US Airways, Tom Horton and Doug Parker, told employees Monday that the top leadership team for the merging companies should be revealed soon.

“We announced our merger in mid-February and expect to announce the new senior leadership team, Doug’s direct reports, sometime late this month or in early June,” they said in a joint communiqué to employees. “We will build out the rest of the officer corps from there. We know there is much interest in this, and we will keep you informed along the way.”

We don’t know what would be included in that, but we assume it would include the president, chief financial officer, the top operations officer, the top planning officer, the top legal person and the top marketing officer. Possibly it would go down through the senior vice president level.

At US Airways, Parker, the chairman and CEO, has Scott Kirby as president, with four executive vice presidents and four senior vice presidents. At American, Horton is chairman, president and CEO, and has no executive vice presidents (with the exception of Dan Garton, who is president and CEO of American Eagle) and nine senior vice presidents.


Democratic Rep. Markey Steps up Pressure on TSA to Keep Ban on Knives on Planes

By Rodrique Ngowi, The Associated Press

Massachusetts U.S. Rep. Ed Markey on Tuesday called the  Transportation Security Administration's plan to allow passengers to carry small  folding knives onto planes "wrong-headed" and announced legislation that will  force the agency not to implement the rules.

Markey held up a Swiss army knife at Boston's Logan International Airport  when he announced that he is filing the bipartisan "No Knives Act" to stop the  new TSA regulations from going into effect on April 25. The bill is co-sponsored  U.S. Rep. Michael Grimm, a Republican from New York's Staten Island.

Flight attendants, pilots and federal law enforcement officers opposed the  rule change, Markey said. The Malden Democrat was joined by representatives of  flight attendants and pilot unions at Logan airport, from where terrorists armed  with knives hijacked two planes that were flown into the World Trade Center on  Sept. 11, 2001.

"On 9-11, we learned that in the confines of an airline cabin, even a small  knife can lead to devastating consequences," Markey said.

The new rules will also allow passengers to include in their carry-on luggage  novelty-size baseball bats less than 24 inches long, toy plastic bats, billiard  cues, ski poles, hockey sticks, lacrosse sticks and two golf clubs. Items like  box cutters, razor blades and knives on fixed blades are still banned.


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