The Texas attorney general has backed off his support of the U.S. Department of Justice’s antitrust lawsuit intended to block the $11 billion merger of American Airlines and US Airways.
This is just the latest blow for the Justice Department in the merger case, which is set to go to trial on Nov. 25. Due to the government shutdown, Justice officials, who had pushed for a March start to the trial, have filed a motion for a stay of litigation, arguing that the agency doesn’t have enough resources for a trial at this time. Lawyers for the carriers have objected to the motion, but the department’s representatives are adamant that they won’t be able to appropriately present the government’s case against the two airlines.
“(The shutdown) is creating difficulties for the department to perform the functions necessary to support its litigation efforts and, accordingly, the department’s policy is to seek a stay in all pending civil litigation,” according to the document filed with the court. “If this motion for a stay is granted, undersigned counsel will notify the court as soon as Congress has appropriated funds for the department.”
Justice officials are asking for a "day-for-day" delay to the start of the trail, a postponement that would account for every day the department can't pursue work on the trial due to the government shutdown.
"If the court denies the request," the department wrote, "the government will comply with the court’s order, which would constitute express legal authorization for the activity to continue."
Texas Attorney General Greg Abbott said he dropped his support of the suit when American officials agreed to maintain daily scheduled service to more than 20 Texas airports. The carrier has also agreed to maintain its Dallas-Fort Worth hub status and keep its headquarters in the area.
In a statement, Tom Horton, chairman of American’s parent company, AMR, said he was glad the carriers could find “common ground” with the Texas official.
“This is an important step forward for American Airlines, for Texas, and for our customers and people of both American and US Airways,” he said. “Texas has long played a lead role in our company’s history, and this agreement is assurance of our commitment to maintain and enhance the outstanding levels of service and connectivity that the new American will provide to the citizens of Texas.”
The American-US Airways deal had always been subject to regulatory approval, but the acquisition seemed a sure thing after the European Union approved the deal in early August with a few concessions from the carriers. Soon after, though, the Justuce Department and the attorneys general from five states and the District of Columbia filed a suit to block the deal. Justice’s reasoning was that the merger “would substantially lessen competition for commercial air travel in local markets throughout the United States.” The two carriers currently compete on more than 1,000 routes, and Justice officials saw that a merger might lead to the cancellation of some of these services.
According to comments on a Website created for the merger, the two carriers have broad support among state governments and the airline community.
“My view is it’s a pro-competitive merger. United and Continental have been allowed to merge. Delta and Northwest have been allowed to merge. I think it makes good sense,” Sean Donohue, DFW’s chief executive officer, is reported as saying last month. Also in September, the Miami-Dade County Commission passed a unanimous resolution urging the Justice Department to drop its litigation.