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iowaman
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U.S. Anti Trust Suit: AMR/LCC - Part III

Fri Aug 16, 2013 9:01 pm

Due to length, here is part three. Part two is archived and available here: U.S. Anti Trust Suit: AMR/LCC - Part II (by LipeGIG Aug 13 2013 in Civil Aviation)
 
ECAMActions
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Fri Aug 16, 2013 9:06 pm

I think it is very telling that after only 3 days since the shock announcement that almost all the press and feedback for this is against the doj. Most industry insiders as well legal analysts and financial analysts think the at worst the doj doesn't have a case and at best the doj is being foolish. Other than the oddball oped from some small town paper most people are scratching their heads as to why this was filed.

I'm beginning to think more and more especially given the amount of states and the choice of states that chose to file with the doj that this is a political message and will be resolved outside the courts as early as before the ends of the month.
 
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Fri Aug 16, 2013 9:09 pm

Quoting ECAMActions (Reply 1):
Most industry insiders as well legal analysts and financial analysts think the at worst the doj doesn't have a case and at best the doj is being foolish

I think you are overstating this as many who actually know what they are talking about in regards to the anti-trust issues think the DOJ has a case. Also, can you answer the questions about your background that were brought up in the last thread?
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LAXintl
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Fri Aug 16, 2013 9:18 pm

White House petition calling for them to intervene and withdraw the DOJ lawsuit.

http://wh.gov/lg0kr

=
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ECAMActions
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Fri Aug 16, 2013 9:19 pm



Quoting apfpilot (Reply 2):
I think you are overstating this as many who actually know what they are talking about in regards to the anti-trust issues think the DOJ has a case. Also, can you answer the questions about your background that were brought up in the last thread?

Really I would like to see this? I haven't heard or seen anyone that thinks the Doj has a ripe case. The judge that will hear this case will want hard facts, not out of context blurbs from out of date emails.

what background? I started working in the industry when I was 17. I've got almost two decades in every facet of the airline world.

[Edited 2013-08-16 14:22:23]
 
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Fri Aug 16, 2013 9:38 pm

Quoting ECAMActions (Reply 4):

Really I would like to see this? I haven't heard or seen anyone that thinks the Doj has a ripe case. The judge that will hear this case will want hard facts, not out of context blurbs from out of date emails.


Look, I know you have an opinion on this, and you're entitled to it. But I'm an antitrust lawyer, and I'm entitled to mine as well. I work with other antitrust lawyers who share my opinion on this case. There are legitimate arguments to be made on both sides of this case. I can tell you there have been mergers blocked on much flimsier grounds than this. (I'm not saying I agree with the DOJ's arguments here or think it should be blocked - I explicitly am not willing to opine on whether this should be blocked or not - but there have been mergers blocked on less than this.) Further, this is the type of evidence routinely used in antitrust cases in other industries: executive statements, even those from a few years ago, are exactly the type of evidence judges often credit. But don't take my word for it:

Here's an excerpt from one article on Competition Law 360, which is an antitrust law trade daily (fair use; and if you like these, sign up with Competition Law 360; they'll have the best coverage of this case you'll find):

Experts praised the complaint as thorough and tightly written, with few obvious holes. It pulls from past mergers, like the 2008 union of Delta Air Lines Inc. and Northwest Airlines Inc., to show that promises not to cut service or raise prices often go unfulfilled. And it points to internal emails acknowledging that consolidation has allowed nearly unfettered fees on extra legroom and checked baggage. One attorney said the DOJ's evidence and breadth of analysis "present a real defense problem."

"The DOJ tells a compelling story, and they aren't pulling any punches," said Jonathan Lewis of BakerHostetler. "When they bring a case, they're bringing it to win, and this is a very well-crafted complaint."

Same article: “There are some very strong 'hot documents' here," said Michael Swartz of Schulte Roth & Zabel LLP. "There's always the defense that they're being taken out of context, but when you've got executives talking like they did, that's going to carry a lot of weight."

"The DOJ has all the pieces they'd want here for a strong case," he added.

From another article in the same publication: "Lawyers who have followed the DOJ's case against U.S. Airways and American said Wednesday it will be a difficult case to defend and will likely require the airlines to make some concessions for regulators to sign off on the deal."

There - and that's from two articles in one day from the primary daily publication in the antitrust world (yes, there is such a thing). I'd send the links, but the terms of subscription don't allow it, and they're behind paywalls anyway.

[Edited 2013-08-16 14:53:04]
 
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Fri Aug 16, 2013 9:43 pm

Quoting IADCA (Reply 5):

"The DOJ has all the pieces they'd want here for a strong case," he added

Also, this is only based on what we know from the PR and what has been released in the complaint. I'd be willing to wager quite a bit that the DOJ has more in their pocket if they need it and there is the potential for them to discover even more through discovery.
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Flytravel
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Fri Aug 16, 2013 11:26 pm

From Part II thread

Quoting commavia:
Can the government even do that - force an airline to "guarantee pricing" in certain markets?

Comcast agreed to the concession of offering $10 Internet service for low-income families when it bought out NBCUniversal. I think it'd be more complicated with airfares, but that type of concession was done in other mergers/acquisitions in other industries.

Quoting commavia:
It's self evident that Southwest and JetBlue are not going to be flying DCA-VPS or DCA-BGR.

I wouldn't rule it out. Sun Country flies LAN-DCA. LAN is a small airport/market and Sun Country is a small carrier.

There is an appeal with DCA slots, and an LCC carrier might be interested in opening the station it would otherwise not open, with the benefit of the DCA slot, esp. if the slot was attached to airport/market of certain size. Southwest is also doing the 3x daily departure model and JetBlue services markets with few departures.

Anyways, it's all moot. It's likely too late for concessions and the merger is over. US/AA got the raw end of the deal compared to it's competitors that merged, but the DOJ likely took more consideraiton to what is fair for the consumer and this blocking of the merger is more analogous to that of the proposed AT&T/T-Mobile merger which would likely would have diminished it down to too few network carriers.

[Edited 2013-08-16 16:28:53]
 
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 1:30 am

Quoting LAXintl (Reply 3):
White House petition calling for them to intervene and withdraw the DOJ lawsuit.

These petitions are for mere calming and have no actual meaning or use in government.
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ECAMActions
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 1:32 am

I love the joke of an argument that keeps coming up on anet that the t-mobile and att merger is the same as aa us.

That would be the case if AA was the largest and US was the second largest. The US.AA merger is more akin to sprint merging with metro PCS.

The DOJ is anti-business.

The horror of AA wanting to make a profit. Nope have to make sure the trash of this nation can make it to Orlando.

The real shocker is the wheel-chair bound texas AG using this as his political spring board for his run for Governor. The extreme political backlash is going to take a toll on this rino. Why else did he write an op ed having to defend his flawed logic in hitching his trailer to this political hack job.


America is a capitalist nation that embraces the free market. Blocking the AA/US merger will hurt jobs and the airline industry as a whole. If American charges too much the free market will remedy any monopoly.

If this isn't to your liking maybe some of you should think about moving to North korea.
 
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 2:31 am

Quoting ECAMActions (Reply 14):
The DOJ is anti-business.

On this, I totally agree. Why would the DOJ allow UA and CO to merge and not AA and US?

The answer: UA kept the HQ in Chicago which pleased Emmanuel, Obama, and the rest of the cronies.

I think the real reason why the merger was rejected is because of the potential increase in fares in the DCA market. They don't want to have various congressmen up in arms that they can't get home during recess
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 2:36 am

Quoting tommy767 (Reply 18):
On this, I totally agree. Why would the DOJ allow UA and CO to merge and not AA and US?

The answer: UA kept the HQ in Chicago which pleased Emmanuel, Obama, and the rest of the cronies.

I think the real reason why the merger was rejected is because of the potential increase in fares in the DCA market. They don't want to have various congressmen up in arms that they can't get home during recess

Have you read the actual complaint? All 56 pages? Have you read what a couple of anti-trust lawyers have posted in this thread?
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tommy767
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 2:43 am

Quoting apfpilot (Reply 20):

No. You expect me to read 56 pages written by the slanted DOJ before coming to an opinion? I can smell why this happened without even reading the cover page.
"KEEP CLIMBING" -- DELTA
 
nutsaboutplanes
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 3:14 am

I have read it, three times and rather agree with him. A couple of pages into it I could already see where it was going. My opinion is that it reads like an editorial opinion piece and not something that I would expect from the US Department of Justice. It was catty and basically tells US Airways that "their place in business is to provide a low fare option"........do you agree that US Airways should be forced to exist as is to provide advantage fares?

The DOJ complaint also alleges that bag fees were a result of or instigated by mergers. AA was the first major to start charging for bags in 2008 which was before DL/NW, WN/FL and UA/CO....I don't understand how they are making that connection.

Fees are mentioned in the complaint as well but no real mention of a corresponding increase in oil prices or the fact that today we are sitting at 110 dollar per barrel Brent.

At this point, I give it 50/50. If it doesn't end up happening in 2013/14, I am guessing it could easily be revisited when tough times fall upon the industry again. It would be nice to have an airline that is strong enough to weather an economic crisis but I guess its more fun to watch mergers that are driven out of desperation than mergers driven by good business sense eh.

[Edited 2013-08-16 20:30:18]

[Edited 2013-08-17 06:21:56 by SA7700]
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FlyASAGuy2005
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 3:31 am

Quoting tommy767 (Reply 18):

The answer: UA kept the HQ in Chicago which pleased Emmanuel, Obama, and the rest of the cronies.

I'm not sure that you understand the current make-up of Justice, and the fact that Obama isn't backing them on this one...want to try again?
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avek00
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 3:36 am

Quoting ECAMActions (Reply 14):
The DOJ is anti-business.

Far from it. If anything, the DOJ Antitrust Division is often criticized for being TOO oriented towards business interests, as it is populated with many "conservative" (e.g., don't rock the boat)-minded lawyers who basically engage in revolving door careers between the Division and the large law firms that represent large businesses.

Quoting ECAMActions (Reply 1):
Most industry insiders as well legal analysts and financial analysts think the at worst the doj doesn't have a case and at best the doj is being foolish.

Not true. Quite the opposite, in fact.

Quoting ECAMActions (Reply 4):
I haven't heard or seen anyone that thinks the Doj has a ripe case. The judge that will hear this case will want hard facts, not out of context blurbs from out of date emails.

Party admissions are indeed some of the "hardest" facts in an antitrust case. More to the point, if you've been reading up on how antitrust law works, you should realize by now there is, at best, a modest chance this case ever gets ruled on by a judge -- neither side actually wants a ruling from a judge, since nothing's guaranteed.
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peanuts
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 4:04 am

Ok. So merger is a crapshoot now.
But the entire Beltway has become a crapshoot.
So we wait. And we talk. And we make deals, or not.

Someone didn't do their homework though...
 
PHX787
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 4:07 am

Quoting peanuts (Reply 27):
Ok. So merger is a crapshoot now.

Well look at it this way--

it's better to be a crapshoot now than a crapshoot after finalization. Case in point? UA CO   
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Flighty
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 4:35 am

Quoting IADCA (Reply 5):
It pulls from past mergers, like the 2008 union of Delta Air Lines Inc. and Northwest Airlines Inc., to show that promises not to cut service or raise prices often go unfulfilled

So hold Delta responsible. The DL/NW merger was never approved at all, under the evident true scenario. I think Delta themselves intimated that their merger would only be legal if MEM were kept. At least it is clear they danced to that tune. Knowing comparable P&Ls of those times, I called that when DL was just claiming they "plan" to keep MEM when it's nearly a pure loss -- from a post merger DL point of view.

But why did they make the claim? In the whole view, it was even a bit cynical, because they thought nobody would analyze what legal integrity their merger may have in 2013 -- which is now slim. Anderson has an inconvenient habit of giving small "tells" as to his anxieties on anti-trust. First with the MEM claims, then last month, "contestable" markets talking points like it's 1981 again suddenly. He's been sweating a lot on anti-trust, because he is smart. DL faces very real risks there as they stand.

[Edited 2013-08-16 21:42:23]
 
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 11:11 am

Quoting ECAMActions (Reply 1):
Most industry insiders as well legal analysts and financial analysts think the at worst the doj doesn't have a case and at best the doj is being foolish.

I am not an expert but I was under the impression DOJ gets feedback from GAO, DOL, DOT and SEC... If you haven't noticed GAO recommended to block this merger ~45 days back. Anyone believes in the theory corporations know better than government shouldn't worry at all. US/AA should fight DOJ to the end.
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 11:36 am

Quoting apfpilot (Reply 20):
Have you read the actual complaint? All 56 pages? Have you read what a couple of anti-trust lawyers have posted in this thread?

I have and I find that a lot of the assertions are tenuous and speculative, at best. Many of the markets they cite as being too concentrated will still see competition from multiple other carriers and/or have extremely low traffic levels. Someone also made a great point in part II about the major airlines still being $30 Billion in the red since 2000. Consolidation in the industry was needed. Allowing those mergers and not US/AA creates three large carriers in DL, UA and WN and everyone else. AA should be fine over the long term but US is at a huge disadvantage and will not be able to compete over the long term.
 
AAplat4life
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 12:32 pm

Quoting silentbob (Reply 31):
I have and I find that a lot of the assertions are tenuous and speculative, at best. Many of the markets they cite as being too concentrated will still see competition from multiple other carriers and/or have extremely low traffic levels.

If the DOJ really cared about this, it would file complaints against UA and DL. They surely have routes where they are so dominant between hubs as to be anti-competitive. Instead, the DOJ looked at other aspects of the combined carrier and focused on routes where US now discounts to gain traffic through connecting flights. The problem with this analysis, however, is that most people go with the nonstop fights and there is no guarantee that US will not change its business practice in the future.

Quoting silentbob (Reply 31):
AA should be fine over the long term but US is at a huge disadvantage and will not be able to compete over the long term

AA had one profitable quarter and that's about it! Without the special costs associated with bankruptcy, it would have been about $350M, which is certainly competitive with the larger United ($469M), US was at about $287M. Since it is smaller than AA, it's clear that US has more profitable operations. Delta was at $685M, and I only see this getting better as it continues to make inroads at JFK, LHR and LAX. US has been consistently profitable for several quarters now, and that is telling. Why should it go battle it out with the bigger airlines in New York and LA if it can make more money elsewhere? AA has a lot of legacy in those markets but has squandered its opportunities and now it is probably too late.

So where does this leave AA? Pricing power has returned to Chicago thanks to Southwest's demand at Midway, but AA has lost much of its international luster and has turned over too many routes to Eagle. The LAX focus is not yet proven, and DL is doing the same thing and will probably do it better. Delta's Virgin investment will give it more key access to LHR and allow it to win more business from AA. DFW is seeing pricing pressures. Too much supply and the competition will only escalate once the Wright Amendment restrictions go away. As a mega hub, DFW is not ATL. So we have MIA, which is nothing to sneeze at but will not be able to support the other problems with AA's five cornerstone strategy.

In terms of being a profitable airline, US is proven and AA has its skeptics. To take things to the next level and be a major global player, neither AA nor US can do this on its own. So I thought the merger was a good idea, but the DOJ thinks otherwise. Best to leave this to the attorneys for US and AA.
 
avek00
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 12:58 pm

The one entity whose potential weigh-in on the case could be powerful is the DOT. The opinion of the DOT will not be dispositive, but it would certainly be noted by the court, and both sides would need to address it. The new Secretary of Transportation is the former mayor of Charlotte.

While DOT approval for a merger is a parallel but separate process, Transportation also examines the impact of a proposed merger on the flying public, and unlike DOJ, is charged with considering a broader set of interests. DOT could wade into the case with an amicus brief supporting the DOJ's argument of how the competitive landscape should be viewed and supporting blockage of the deal, or it could potentially devastate the DOJ's case by rejecting its competitive analysis and asserting that the AA/US merger is consistent with America's air transport policy favoring consolidation as the best way to remedy longstanding structural problems in the industry.

Or, DOT could split the difference and side with DOJ on the antitrust effects of the merger, but argue against injunctive relief, claiming other remedies are more appropriate based on Transportation's experience in these matters.

[Edited 2013-08-17 06:08:08]
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milemaster
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 1:25 pm

Quoting ECAMActions (Reply 10):
The horror of AA wanting to make a profit. Nope have to make sure the trash of this nation can make it to Orlando.

What kind of reasonable level-headed person says stuff like that?

...Oh, they don't?
 
HPRamper
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 1:28 pm

Quoting tommy767 (Reply 18):
I think the real reason why the merger was rejected is because of the potential increase in fares in the DCA market. They don't want to have various congressmen up in arms that they can't get home during recess

On the contrary, with fare increases, the only people that will be able to afford them will be the congressmen  
 
Cubsrule
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 6:03 pm

Quoting HPRamper (Reply 24):
On the contrary, with fare increases, the only people that will be able to afford them will be the congressmen

DCA is already an extremely expensive market for most of us within the perimeter. Walkup fares in my city are usually about $500 more o/w than walkups to BWI (BWI has similar frequency from here but many more seats).

Quoting avek00 (Reply 15):
as it is populated with many "conservative" (e.g., don't rock the boat)-minded lawyers who basically engage in revolving door careers between the Division and the large law firms that represent large businesses.

You mean folks like Christine Varney? Certainly, she's an example of a "revolving door" attorney who was decidedly anti-business during her government service, particularly at FTC.
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ckfred
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 7:42 pm

Quoting Flytravel (Reply 7):
Anyways, it's all moot. It's likely too late for concessions and the merger is over. US/AA got the raw end of the deal compared to it's competitors that merged, but the DOJ likely took more consideraiton to what is fair for the consumer and this blocking of the merger is more analogous to that of the proposed AT&T/T-Mobile merger which would likely would have diminished it down to too few network carriers.

It's never too late to settle a case. I've seen cases, both criminal and civil, settle while the jury was deliberating.

But, I'll say it before, and I'll say it again. Changing the standard for regulatory review can be a problem, if the regulatory body doesn't give everyone fair warning. When DOJ approved the last merger, it should have said that while the merger wasn't anti-competitive, any merger in the future of larger carriers would go through a heightened level of scrutiny.

In both the DL/NW merger, and the UA/CO merger, DOJ said that competition was limited to routes in which the merging carriers competed on non-stop routes, such as MSP-ATL (DL/NW) and ORD-EWR (UA/CO). Now, DOJ is saying that US and AA compete on more than a thousand routes.

This is why DOJ doesn't have a slam dunk winner. If I were the judge presiding over the case, I would ask DOJ's attorneys why they are applying a different standard, and why they never bothered to give the airline industry a "head's up" that the standard was changing.

The other problem is that with the last three mergers, no carrier was in a pending Chapter 11 action. AA is. The reorg. plan calls for AMR shareholders to get 3.5% of the combined carrier, all creditors to be paid in full, and US employees to be brought up to the AA pay scale.

If AA has to go it alone, the shareholders will get nothing. The creditors will get cents on the dollar. US employees will still be negotiating for higher wages (and US pilots will be trying to resolve the seniority problems).

The reason why AA was allowed to buy TWA was that without AA, TWA would have been liquidated, and every last employee would have lost his or her job. That's not the case now, but some will argue that several years into the future, US or AA could be back in bankruptcy as a Chapter 7, with the PBGB taking over the pensions.
 
nutsaboutplanes
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 8:18 pm

Quoting ckfred (Reply 26):

If A.net had a "like" button, I would have liked your post  
American Airlines, US Airways, Alaska Airlines, Northwest Airlines, America West Airlines, USAFR
 
JoePatroni707
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 8:38 pm

When will this case go to trial? Is this a case where a jury or judge will decide? From what I have heard around the AA camp is AA has no plan "B" if this merger does not happen, all the eggs are in DP's basket.
 
AAplat4life
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 8:57 pm

Quoting ckfred (Reply 26):
In both the DL/NW merger, and the UA/CO merger, DOJ said that competition was limited to routes in which the merging carriers competed on non-stop routes, such as MSP-ATL (DL/NW) and ORD-EWR (UA/CO). Now, DOJ is saying that US and AA compete on more than a thousand routes.

I agree with you that this sounds arbitrary. However, DOJ has relaxed its standards in the past and now apparently believes that they should be tightened. Unless they are applying the standards under regulations, they do not have to give notice and allow for a comment period before changing the approach.

Quoting ckfred (Reply 26):
If AA has to go it alone, the shareholders will get nothing. The creditors will get cents on the dollar. US employees will still be negotiating for higher wages (and US pilots will be trying to resolve the seniority problems).

This has little to do with the anti-trust analysis under the jurisdiction of the DOL. There is no indication right now that AA will be liquidated or stop flying anytime soon.
 
timboflier215
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 8:58 pm

Why haven't DOJ gone after DL or UA for failing to keep to the terms of their mergers? I know it's too late to undo them or anything, but surprised that fines/ further concessions haven't been discussed?
 
silentbob
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 9:06 pm

Quoting AAplat4life (Reply 21):
Since it is smaller than AA, it's clear that US has more profitable operations.

US has also been operating under bankruptcy era contracts for flight crews since the HP merger. Those huge savings will come to an end one way or another and will significantly impact the overall bottom line. Given the revenue pressure of PHX and CLT, it's unlikely that US will be able to offset those increases.

Quoting ckfred (Reply 26):

Utterly fantastic post.
 
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Polot
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 9:10 pm

Quoting JoePatroni707 (Reply 28):
From what I have heard around the AA camp is AA has no plan "B" if this merger does not happen, all the eggs are in DP's basket.

If AA is stupid enough to not have a plan B (which I'm sure they do, and always had) then they deserve to fail.
 
AT
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 9:12 pm

fyi there's a great article in today's new york times about the merger:

http://www.nytimes.com/2013/08/17/bu...it-may-be-one-merger-too-many.html

It's well written and although one can argue both for and against the merger, it makes a very good case (in my opinion) on why the fact that they allowed the Delta-Northwest and United-Continental mergers to go through, should not be relevant to the present situation.


To cite the last paragraph:

There’s a huge first mover advantage” in any market, Professor Sager said, since the industry is less concentrated and there are fewer bad precedents. American and US Airways are saying “You have to give us this chance because everyone else got it,” he said. “But that doesn’t make any sense. Just because you let two competitors merge doesn’t mean you have to let everyone else merge. You’d have to approve every merger, which cannot be the law, should not be the law and is not the law.”
 
FSXJunkie
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sat Aug 17, 2013 10:49 pm

Quoting timboflier215 (Reply 30):
Why haven't DOJ gone after DL or UA for failing to keep to the terms of their mergers? I know it's too late to undo them or anything, but surprised that fines/ further concessions haven't been discussed?

The only reason this is happening ultimately is politics, Obama caught flak in his first term for not being hard enough on anti-trust, so on his second term the DOJ is making up for the perceived neglect, think they've recently set a record for merger obstructions.

DL and UA aren't on the radar because they're not making as loud a noise as US/AA are and in the general sense the terms to which DL and UA were beholden have been forgotten. If DL or UA were to do something stupid and remind people what their merger terms were and that they're using said terms as toilet paper, then the DOJ would break them. DL and UA aren't that stupid, they got where they are because of savvy long-term strategic planning, American is lacking in that department hence the fix they are in now, and US (Doug Parker) is far too eager to consume competitors and is blinded to the larger picture.

America West's. strategy is based on competition consumption. As soon as the ink was dry "US Airways" (really America West operating under said marque.) set it sights on absorbing the next airline. Callsign "Cactus" is The Blob.
 
avek00
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sun Aug 18, 2013 12:42 am

Here's a speech transcript from 2005 featuring a senior DOJ Antitrust Lawyer specifically discussing Antitrust for Airlines. It does a wonderful job discussing, in rather plain terms, the antitrust issues that can arise when airlines want to merger:

http://www.justice.gov/atr/public/speeches/217987.htm
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jayunited
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sun Aug 18, 2013 1:48 am

Quoting AT (Reply 33):

That is a really great article that you posted. What I found interesting is that they did do the comparison and contrast between the UA/CO merger and the proposed AA/US merger. The article mentioned that the UA/CO merger should have never been allowed because in markets where UA clearly dominates ticket prices have risen much faster than in other markets. Another interesting fact that was brought up is the fact that the WN effect is over and how that is hurting the AA/US merger. The article mentioned that only a few years ago when WN enter a market they had the power to greatly reduce ticket prices and then hold those prices down but now because WN has gotten so large and because of the DL/NW and UA/CO merger when WN enters a markets ticket prices in most cases are not dropping at all. The article also points out that the current LCC's B6, NK, VX) don't have the power or resources to contain and control ticket prices.

It seems as if there a lot of issues outside of AA & US's control that are now playing a part in the DOJ's decision to try and block this merger.
 
FlyASAGuy2005
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sun Aug 18, 2013 3:06 am

For those spelling doom for AA...

Remember that they didn't propose this merger, US did. Yes, they will have to rework many aspects of their restructuring plan but I do not see this merger not going though being the end all for AA in any way shape or form.
What gets measured gets done.
 
AAplat4life
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sun Aug 18, 2013 12:28 pm

Quoting jayunited (Reply 36):
The article mentioned that only a few years ago when WN enter a market they had the power to greatly reduce ticket prices and then hold those prices down but now because WN has gotten so large and because of the DL/NW and UA/CO merger when WN enters a markets ticket prices in most cases are not dropping at all.

Costs have gone up for WN, and so have ticket prices. It happens to all LCCs that survive. Still WN continues to provide extra benefits like free check bags and the ability to rebook without paying $200. Internet access onboard is cheaper as well.
 
bobnwa
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sun Aug 18, 2013 12:52 pm

Quoting ECAMActions (Reply 1):
Most industry insiders as well legal analysts and financial analysts think the at worst the doj doesn't have a case and at best the doj is being foolish.

Definitley a gross exageration on your part.
 
panampaul
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sun Aug 18, 2013 3:12 pm

Having followed the case (and the discussion here of course), I have to wonder what the impact on other large carriers in the U.S. might be, i.e. will the DOJ (which happily looks into antitrust issues in large companies that aren't merging, witness AT&T and Microsoft among many others) start to look at Delta's expansion for example.

This paragraph gave me food for thought:

Quote:
Indeed, over the past decade, the largest three airlines reached that mark by virtue of merging. In some markets, airlines have continued to grow by leaps and bounds. Delta, for example, knew it was too small to compete in New York so it swapped its Reagan-National slots with US Airways’ LaGuardia slots. As a result, Delta has grown significantly in New York, has expanded in Chicago, and increased in Los Angeles. It’s also growing substantially in Seattle. ....

From:

American Airlines-US Airways Merger: Not Over Until the Fat Lady Sings
 
jayunited
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sun Aug 18, 2013 3:30 pm

Quoting AAplat4life (Reply 38):
Costs have gone up for WN, and so have ticket prices. It happens to all LCCs that survive. Still WN continues to provide extra benefits like free check bags and the ability to rebook without paying $200. Internet access onboard is cheaper as well.

I understand what you are say and you are correct WN''s cost have gone up but they still have some benefits that DL and UA do not provide. What my point was and one of the points that the article was making is that there are a lot of other issues at play here that neither AA nor US have any control over but because it is all apart of the aviation industry it now is effecting the proposed AA/US merger.
 
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par13del
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sun Aug 18, 2013 3:39 pm

Quoting ECAMActions (Reply 1):
Most industry insiders as well legal analysts and financial analysts think the at worst the doj doesn't have a case and at best the doj is being foolish.

Are these the same folks who precided over an industry that was loosing billions and had no clue how to trun the ship around other than to abuse the legal system of chpt.11, some of them more than once 
Quoting silentbob (Reply 31):
US has also been operating under bankruptcy era contracts for flight crews since the HP merger.

Which if AA emerges as a stand alone entity will be doing the same thing. AA was the only carrier - WN also - of any size which during turbulent economic times did not take the easy way out and nullify contracts and share holders values to reduce cost.

Quoting JoePatroni707 (Reply 28):
From what I have heard around the AA camp is AA has no plan "B" if this merger does not happen, all the eggs are in DP's basket.
Quoting Polot (Reply 32):
If AA is stupid enough to not have a plan B (which I'm sure they do, and always had) then they deserve to fail.

We are up to plan C, plan A was was the normal business plan followed by all other legacy carriers, use chpt.11 to reduce operating expenses, so far that is working out ok. B was the creditors "liking" US.

Quoting FlyASAGuy2005 (Reply 37):
Remember that they didn't propose this merger, US did.

Yes, and the creditors jumpded on board to preserve as much of their value as possible, if the merger falls through one would expect that they would have enough intelligence to have management come up with another plan. I said it in the previous thread and will say it again, AA management was not a god unto themselves, the board and all significant investors also played a role in how AA was then leading to the filing, now they have a third party involved, the court.

Quoting ckfred (Reply 26):
But, I'll say it before, and I'll say it again. Changing the standard for regulatory review can be a problem, if the regulatory body doesn't give everyone fair warning. When DOJ approved the last merger, it should have said that while the merger wasn't anti-competitive, any merger in the future of larger carriers would go through a heightened level of scrutiny.

I have one question in relation to your point, the Federal Government changed the chpt.11 laws due to the abuse of UA.
DL and NW entered chpt.11 just prior to the old provisions expiring, most thought it was a mistake for AA not to follow at the same time to reap the same benefits.
Anyway, do the new rules have any play whatsover in the current position of the DOJ, did they look at what DL/NW accomplished and are in any way shape or form being influenced by that in their discussions with AA & US prior to the breakdown of talks and the ultimate filing of the legal case.
 
MAH4546
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sun Aug 18, 2013 6:58 pm

Quoting AAplat4life (Reply 21):
The LAX focus is not yet proven, and DL is doing the same thing and will probably do it better.

Not yet proven? AA has had an LAX focus for much the past two decades. DL would kill to switch spots with AA in LA.

AA has screwed up majorly in the past decade, especially in New York City. LAX, however, isn't something they've been screwing up with. And in addition to this year's ten new LAX routes, another dozen or so are on tap for 2014.

[Edited 2013-08-18 12:00:09]
a.
 
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jetblastdubai
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sun Aug 18, 2013 9:21 pm

If the AA/US merger goes through eventually, how will the new AA's financials stack up when the AA/US/AWE crews all start getting the new pay scales? They didn't make any earth-shattering profits with the old pay scales so it's could be a tough go with the new pay rates in effect.

I see fewer potential merger snafus with AA/US than UA/CO had due to the fact that AA is so much larger than US and they're using most of AA's software and other procedures (I would assume). However, with a new carrier that size, any glitch could have major, expensive repercussions.
 
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TVNWZ
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sun Aug 18, 2013 9:48 pm

I believe that DOJ and US/AA will have to settle this quickly or both sides will decide on their own to look elsewhere. You can not draw out a merger like this, with unsettled leadership and organization, for years. And it will take years if the two sides can not come to an agreement.

So, it is either concessions to make this work for the DOJ, or this thing is DOA.

[Edited 2013-08-18 15:48:09]
 
dtw2hyd
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sun Aug 18, 2013 10:07 pm

Quoting ckfred (Reply 26):
It's never too late to settle a case. I've seen cases, both criminal and civil, settle while the jury was deliberating.

This is an accurate assessment of the situation.

Quoting ckfred (Reply 26):
Changing the standard for regulatory review can be a problem, if the regulatory body doesn't give everyone fair warning. When DOJ approved the last merger, it should have said that while the merger wasn't anti-competitive, any merger in the future of larger carriers would go through a heightened level of scrutiny.

DOJ is not in forecasting business. It can only approve or block any given merger application. This is not end of airline mergers. Jetblue and Spirit merger may be approved without any concerns.

Quoting ckfred (Reply 26):
The other problem is that with the last three mergers, no carrier was in a pending Chapter 11 action. AA is. The reorg. plan calls for AMR shareholders to get 3.5% of the combined carrier, all creditors to be paid in full, and US employees to be brought up to the AA pay scale.

If AA has to go it alone, the shareholders will get nothing. The creditors will get cents on the dollar. US employees will still be negotiating for higher wages (and US pilots will be trying to resolve the seniority problems).

You answered your own concern. There were "no pending Chapter 11 reorganizations prior to merger" means, prior share holders, creditors and employees bare the full burden of Chapter 11. Why should AA shareholders, creditors and employees bare less burden.
All posts are just opinions.
 
m11stephen
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Sun Aug 18, 2013 11:35 pm

When was the last time the DOJ sued to block an airline merger... When UA and US tried to merge back in the early 2000s? (I forget the exact year, my apologies)
My opinions, statements, etc. are my own and do not have any association with those of any employer.
 
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par13del
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Mon Aug 19, 2013 1:00 am

Quoting TVNWZ (Reply 47):
You can not draw out a merger like this, with unsettled leadership and organization, for years. And it will take years if the two sides can not come to an agreement.

First things first, merger or not I believe AA has limited time in chpt.11, I stand to be corrected but I would be shocked if the changes in the law due to UA's long sojourn in chpt.11 allows unlimited extensions while a merger is negotiated.
The judge and creditors were already working on AA's exit plan - regardless of what folks thought of it - when the merger plan was presented, it will be interesting to see how the two judges work on a timeline for resolution.

Allowing AA to remain in chpt.11 while the DOJ case drags on would be a perversion of the changes to chpt.11, I trust it means that there is a ticking clock on the DOJ's case, or the chpt.11 judge has the power to demand that AA leave chpt.11 and work on the merger on their own terms.
Frankly, I'm pulling for them being forced to leave chpt.11 as soon as possible, they have already had extensions.
 
Cubsrule
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RE: U.S. Anti Trust Suit: AMR/LCC - Part III

Mon Aug 19, 2013 1:16 am

Quoting par13del (Reply 50):
Allowing AA to remain in chpt.11 while the DOJ case drags on would be a perversion of the changes to chpt.11, I trust it means that there is a ticking clock on the DOJ's case, or the chpt.11 judge has the power to demand that AA leave chpt.11 and work on the merger on their own terms.

I'm afraid I don't understand why a long time in C11 is bad in AA's case specifically. Isn't it in the creditors' interest (as well as that of other stakeholders) for AA to remain as long as it takes to work out the best possible exit strategy. You seem to assume that it's easy/beneficial for companies to operate while in C11 and so there is an incentive to linger. Nothing could be farther from the truth.
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