The outcry from the government’s ill-conceived intrusion into the planned merger of American Airlines and US Airways appears to be getting through to U.S. Attorney General Eric Holder and Florida Attorney General Pam Bondi.
Amid protests by pilots, flight attendants and the mayors of Miami and six other cities affected by the merger, Holder is now negotiating an end to a lawsuit the Justice Department filed in August to block the $11 billion merger. Bondi was one of several state attorneys general to join the suit.
We encourage her to find a resolution that works for Florida and to withdraw her support for the suit.
Despite approving several other airline mergers, the federal government sued over the American and US Airways merger, claiming it would lead to less competition and higher fares.
But in a letter to Holder, the mayors wrote, “we know the airline industry creates jobs, supports local business, attracts new business, and promotes infrastructure growth.”
The flight attendants and pilots fear the consequences if the merger is blocked, and the affected airlines are unable to compete with carriers made stronger by mergers the government allowed.
“For the sake of American Airlines, its thousands of Florida-based workers and the economic well-being of the Sunshine State, we hope you’ll ... reconsider your position,” the pilots association wrote to Bondi.
It appears she is listening. Bondi has now met with American Airlines’ top executive and is working to resolve any issues in Florida. Her actions follow the defection of Texas, which withdrew its support of the suit after reaching an agreement with American to keep its headquarters in that state and maintain its daily service there.
That’s putting pressure on Holder, who appears to be backing away from the Justice Department’s vow in August to take the case to trial. Experts immediately questioned whether Holder had much of a case.
The Justice Department approved the mergers of Delta Air Lines and Northwest, United and Continental, and Southwest and Air Tran.
“Justice will be unable to convince a judge the merger is anticompetitive, especially given that (American) and US Airways offer far less competitive overlap versus all three previous mergers approved by Justice,” an industry analyst told the New York Times.
American Airlines filed for bankruptcy in 2011, and a reorganization plan approved by a federal judge included the merger with US Airways. The proposed merger has the blessing of creditors and the affected labor groups.
The airlines argue the merger will result in more domestic and international flights and keep them competitive with other larger carriers.
There is no disputing that consumers pay more today than before the spate of airline mergers. But the alternative is to further limit competition by keeping the two airlines at a disadvantage. The merger will create a competitor with other large airlines, and allow the free market to work.
Holder is reportedly talking to the airlines about a settlement that will assure there is a competitive balance at a few key airports.
Considering the jobs that might be lost, the arbitrary nature of the suit and the long odds of winning at trial, he should ground the lawsuit and cut a deal.