By Diane Bartz
WASHINGTON Oct 1 The U.S. Department of
Justice, fighting a proposed merger of US Airways Group Inc
and American Airlines parent AMR Corp, lost a
bid to delay the case on Tuesday, and share prices for both
companies jumped on perceptions that prospects for the deal had
In Dallas, Texas Attorney General Greg Abbott said his state
was dropping out of a U.S. Justice Department lawsuit seeking to
block the merger, a move some experts called a crack in the
united front of those opposing the creation of the world's
US Airways shares closed up 3.9 percent at $19.69 on
Tuesday, while AMR closed up 8.3 percent at $4.45.
Texas was one of several states that joined the Justice
Department lawsuit, filed in August, that has sought to stop a
deal it said would lead to higher airfares and less competition.
The other states are Arizona, Florida, Michigan,
Pennsylvania, Tennessee, Virginia. The District of Columbia also
opposes the deal.
One airline expert called the Texas decision good news for
the deal's prospects of completion.
"This is a positive development for American and US
Airways," said George Hamlin, an airline consultant in Fairfax,
Virginia. "The suit was presented as a united front between the
federal government and a number of states. The front is no
In Washington, developments in the long-running merger case
met head-on with the day's biggest news - the shutdown of the
U.S. government in a partisan dispute over healthcare reform.
The Justice Department requested a delay after many of its
attorneys and support staff were placed on furlough.
"This is creating difficulties for the department to perform
the functions necessary to support its litigation efforts," the
department said in a court filing.
Merging companies usually oppose delays because they make it
harder to hold deals together. So it was good news for the
airlines when Judge Colleen Kollar-Kotelly turned down the
request in an order issued on Tuesday.
A lawyer for the airlines expected the trial to begin as
scheduled in late November.
"From what the judge said in there, and I think everybody
heard, we're going to trial on Nov. 25," Richard Parker said
after a pretrial hearing. "We are planning on a Nov. 25 trial
Parker said a settlement resolving the fight was still
"We are interested in a reasonable settlement in this case,"
Any settlement would mean asset sales, which in turn would
require approval from the judge overseeing American's emergence
TEXAS SECURES CONCESSIONS
Under the agreement announced on Tuesday, the Dallas/Fort
Worth International Airport would remain a hub for the combined
carrier, whose headquarters would be in Texas. Almost two dozen
small Texas airports would continue to get daily service, the
Texas attorney general's office said.
Antitrust experts said that losing Texas from the suit was
unlikely to affect the Justice Department's ability to litigate
to stop the deal.
"The case will proceed without Texas and it will have no
impact on the government without the state. I don't think it
will matter one way or another," said Jonathan Lewis, an
antitrust expert with Baker Hostetler.
The airlines have defended the deal in court filings, saying
it would create $500 million in savings to consumers annually by
creating a stronger competitor to Delta Air Lines Inc
and United Continental Holdings Inc.
But the Justice Department has said the merger would be bad
for consumers. Its complaint focused on Reagan National Airport,
which serves Washington D.C., where the two carriers control a
combined 69 percent of takeoff and landing slots. It also listed
more than 1,000 different routes where, between them, the two
airlines dominate the market.
The case at the U.S. District Court for the District of
Columbia is No. 1:13-cv-1236.