Judge to rule on American merger by Wednesday

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by JASON WHITELY

Bio | Email | Follow: @jasonwhitely

WFAA

Posted on November 25, 2013 at 10:31 AM

Updated Monday, Nov 25 at 6:42 PM

NEW YORK – A New York bankruptcy judge says he’ll rule by Wednesday about whether to grant a 14-day restraining order to an attorney who challenged the merger of Fort Worth-based American Airlines and US Airways or allow the two to become one.

American Airlines returned to U.S. Bankruptcy Court in lower Manhattan on Monday for what is likely to be the final time before Judge Sean Lane rules to finalize the merger or not. 

Last week, a San Francisco-based attorney applied for Temporary Restraining Order to stop the merger out of concern that it will increase fares and reduce competition. But American is asking for the judge to sign off on its reorganization plan, which is to merge with US Airways.

The lawyer, Joseph Alioto, represents 40 travel agents and business passengers concerned about the effects the merger would have on those businesses. If the judge grants Alioto’s temporary restraining order, his clients will testify in court before Lane rules in finality on the merger. 

If Judge Lane grants American’s reorganization plan the merger is expected to close on Dec. 9. During Monday’s proceedings, Lane frequently challenged Alioto and was critical of his request –– the judge has no intention of retrying the Department of Justice case and refused to allow Alioto to enter new evidence, he said.

“You don’t get to make up arguments on the fly,” the judge said. 

Alioto argues the merger will result in 24 airports, making American Airlines a monopoly. Lane, however, could not locate the lawyer’s arguments in the legal briefs he filed. 

None of Alioto’s 40 plaintiffs were present on Monday. An attorney for US Airways questioned that they face personal harm from being present and said that the lawyer’s argument provided much rhetoric with scant substance. 

The judge adjourned the hearing just before noon.

Should Lane approve the merger, American Airlines and US Airways would still operate as two separate carriers until the Federal Aviation Administration grants a single-operating certificate, which could take 18 to 24 months.

Several American executives including Bev Goulet and Gary Kennedy were in the courtroom with several dozen attorneys. Laura Glading, president of the Association of Professional Flight Attendants, is also here. Glading and the Allied Pilots Association pushed hard for the merger before the airlines publically announced it in February.

Two weeks ago, American and US Airways settled an antitrust lawsuit with the U.S. Department of Justice which paved the way for the hearing today. The airlines agreed to give up slots at Reagan National Airport in Washington, DC and at New York’s LaGuardia airports.

The divestiture will result in 44 fewer departures from D.C. and a dozen fewer from LaGuardia. In addition, American also agreed to give up a couple gates in Boston, Miami, Dallas Love Field, Chicago O’Hare International Airport, Los Angeles International Airport and Miami International Airport.

The merger between American and US Airways will create the world’s largest airline with more than 6,500 daily flights to 336 destinations in 56 countries.

Email jwhitely@wfaa.com

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