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US Airways Group Inc (NYSE:LCC) And AMR Corporation (OTCMKTS:AAMRQ) Defended The Merger Generating $500 Million In Consumer Savings

Written by on September 23, 2013

On Friday, US Airways Group Inc (NYSE:LCC) and American Airlines’ parent AMR Corporation (OTCMKTS:AAMRQ), whose proposed merger has been halted by U.S. government opposition, required the court to entail the Justice Department to bring the documents concerning its approval of four prior airline mergers. The airlines said that the merger is required to facilitate them for competing in a highly consolidating industry.

In court filings, the airlines have supported the deal saying that it would generate $500 million in savings to consumers per annum by developing a stronger rival to Delta and United. On August 13, the Justice Department filed a lawsuit to stall the planned merger of American’s parent, AMR Corp and LCC, on the grounds that the deal will cause increased air fares and other fees. In November, a judge will hear the case without a jury and will come to a decision whether the deal can move ahead.

Regarding the potential merger, US Airways and American required the analyses, studies, forecasts and other documents concerning the Justice Department’s sanction of the four mergers finished over the past decade. In 2008, Delta Air Lines, Inc (NYSE:DAL) bought Northwest Airlines in 2008. In 2010, United Continental Holdings Inc (NYSE:UAL) merged with Continental. In 2011, Southwest Airlines Co. (NYSE:LUV) acquired AirTran and US Airways acquired America West in 2005.

Robert Skitol, an antitrust expert with Drinker Biddle & Reath LLP said that the move for the material, which could be quite widespread, will probably be granted. He further said that surely it is going to be very burdensome, as it is very resource-intensive.

The government previously said that the request was too wide, and data on prior mergers is not applicable to this case. The airlines and the Justice Department could resolve the antitrust lawsuit, which will probably need the companies to sell certain assets. Any divestitures will entail approval from the judge administering American’s emergence from bankruptcy. AMR Corporation (OTCMKTS:AAMRQ) shares were down -0.76% to $3.92 in last trading session. US Airways Group Inc (NYSE:LCC) shares fell -0.42% and closed at $18.89 in last trading activity.

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