Officials in 3 states fight suit against American-US Air merger

MIAMI/ATLANTA Wed Aug 21, 2013 6:08pm EDT

MIAMI/ATLANTA Aug 21 (Reuters) - Officials in three states are pushing back against the U.S. government's attempt to block the proposed merger of American Airlines and US Airways to create the world's biggest airline, saying the combined company would benefit their local economies.

Last week, the U.S. Justice Department filed a lawsuit challenging the merger, saying it would reduce competition among air carriers and ultimately lead to higher fares for passengers.

But some local political and business officials in Florida, Texas and North Carolina, which are home to large hubs for American and US Airways, are asking the federal government and supporting states to reconsider the lawsuit.

Carlos Gimenez, the mayor of Miami-Dade County, which includes the city of Miami, on Wednesday called on U.S. Attorney General Eric Holder to withdraw the lawsuit.

"American Airlines is a vitally important part of our work force," Gimenez told a media briefing. "It's vitally important that American be allowed to come out of bankruptcy and expand their footprint."

American Airlines, which sought Chapter 11 protection in late 2011, is one of the largest private employers in Miami-Dade County. The carrier operates around 70 percent of the flights at the Miami airport, making it a dominant hub for flights to and from Latin America. Local officials have long promoted Miami as the "Gateway to the Americas."

Gimenez's support for the deal put him at odds with Florida state officials. The Justice Department lawsuit was joined by six states, including Florida and Texas.

Gimenez said Miami airport lawyers were looking at their legal options.

The Justice Department lawsuit drew support from consumer advocates, but surprised the airline industry and raised questions about the sustainability of the airlines' budding recovery.

Other communities also support the merger.

"For us, it's keeping what we have, we hope, and adding more" flights and jobs, said Connie Majure-Rhett, president and chief executive of the Chamber of Commerce in Wilmington, North Carolina. US Airways offers 13 daily flights out of the Wilmington airport.

Majure-Rhett said the Wilmington airport had lost a direct flight to Chicago and hoped it might regain it in the merger of the two carriers. "That's one of our most traveled-to destinations for our business travelers," she added.

In Texas, the heads of the Chambers of Commerce in Dallas and Fort Worth, where the merged American Airlines would be based, sent a letter to that state's attorney general asking him to drop his support for the U.S. Justice Department's lawsuit.

"If this merger is not finalized, there is no plan B for American Airlines," Dallas Regional Chamber President James Oberwetter and Fort Worth Chamber President Bill Thornton wrote.

"By any stretch of the imagination, having what the press refers to as the 'World's Largest Airline' based in Texas, makes our state more competitive," their letter added.

American parent AMR Corp and US Airways plan to vigorously defend the merger, which they say would provide a third global rival to Delta Air Lines and United Continental, both the products of mergers.

Miami International Airport Director Emilio Gonzalez said he worried about the potential impact on the airport's bond ratings if the merger fails.

Standard & Poor's and Fitch Ratings in October assigned A ratings to revenue bonds issued by the county department responsible for maintaining the Miami airport.

"Our concern is that anything that affects American Airlines' growth, anything that affects American Airlines' ability to get out of bankruptcy through this merger, could very well have a detrimental effect on our bond rating," Gonzalez said.

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Comments (3)
To the Department of Justice: What happened to free enterprise? There is no justice in your actions.

Aug 21, 2013 6:35pm EDT  --  Report as abuse
Get-It-right wrote:
Can we citizens file a law Suit against the Government for not passing a budget o time?

Aug 21, 2013 7:58pm EDT  --  Report as abuse
Bitterend wrote:
The DOJ is undertaking this lawsuit in an effort to PROTECT free enterprise. In any given industry, at some point between multiple firms and one firm a line must be drawn by regulators. Consolidation in the U.S. airline industry has already gone far enough, and passengers are paying the price in the form of reduced service and a sharp increase in ancillary fees. This merger would only serve to make matters worse for consumers.

Aug 22, 2013 8:56pm EDT  --  Report as abuse
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California state worker Albert Jagow (L) goes over his retirement options with Calpers Retirement Program Specialist JeanAnn Kirkpatrick at the Calpers regional office in Sacramento, California October 21, 2009. Calpers, the largest U.S. public pension fund, manages retirement benefits for more than 1.6 million people, with assets comparable in value to the entire GDP of Israel. The Calpers investment portfolio had a historic drop in value, going from a peak of $250 billion in the fall of 2007 to $167 billion in March 2009, a loss of about a third during that period. It is now around $200 billion. REUTERS/Max Whittaker   (UNITED STATES) - RTXPWOZ

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