Settlement of merger lawsuit a victory for airlines


It would have been more fun to see American Airlines and US Airways thump the U.S. Justice Department in court, but the settlement announced Nov. 12 in the government’s lawsuit opposing the airlines’ merger was the next best thing. Fun aside, we subscribe to the theory that it’s best to take your victories where you find them. And make no mistake about it, the settlement was a victory for American and US Airways – and for the blockbuster new airline that will emerge when the two companies finally join forces. That new entity is expected to produce $40 billion in annual revenue. After all the posturing and jawboning by the Obama administration’s business-bashing Attorney General Eric Holder the government essentially surrendered, allowing the merger to proceed in return for concessions that will diminish the new airline’s reach in some parts of the country but will not seriously impede its ability to prosper in the mercilessly competitive world of air travel. Some of Holder’s demands, in fact, likely involve changes that the airline would have made in the course of developing its business plan, with or without a lawsuit. Essentially, the airlines agreed to give up gates and takeoff/landing slots at Reagan National Airport – widely viewed as the government lawsuit’s prime objective – and several other airports. The airlines also agreed to keep operating hubs in Dallas-Fort Worth and Charlotte, N.C., and at several other major airports. Airline officials would have been happier if Holder had minded his own business instead of suing them but they were glad to resolve the issue and avoid a trial that had been scheduled to begin on Nov. 25. “We are pleased to have this lawsuit behind us and look forward to building the new American Airlines together,” said US Airways chief executive Doug Parker, who will be CEO of the combined airline when the merger is concluded. Holder, of course, was in full face-saving mode, saying the settlement could “shift the landscape of the airline industry.” “By guaranteeing a bigger foothold for low-cost carriers at key U.S. airports,” Holder said, “this settlement ensures airline passengers will see more competition on nonstop and connecting routes throughout the country.” Whatever. Take your victories where you find them. There is reason to believe that the airlines would have prevailed in a trial but the proceedings would have been costly and would have delayed both American’s long-awaited emergence from bankruptcy and the combined airlines’ entry into a marketplace that has been dominated by carriers who have been anything but consumer friendly in recent years: United, which previously merged with Continental; and Delta, which teamed up with Northwest Airlines. With the lawsuit in their rearview mirror, the airlines are now expected to complete the merger by December. That’s extremely good news for the country, for Texas and for the Dallas-Fort Worth region, which is home to American Airlines and will be home to the combined airline as well. The Fort Worth Chamber of Commerce has estimated that American Airlines employs more than 20,000 people in the D-FW Metroplex and contributes to the employment of 175,000 more by vendors, contractors and others who do business with the airline. This merger was always a good idea. Opposing it was always a bad idea, which Holder apparently realized when it came time to put up or shut up in court. Give him credit for bailing out. And give the airlines credit for sticking to their guns. They had a deal worth fighting for and they fought for it. Free enterprise prevailed.