AMR CEO Sees Way to Settle Suit Over US Airways MergerCaroline Chen and Mary Schlangenstein
American Airlines Chief Executive Officer Tom Horton said “there’s a way” to reach a settlement with U.S. antitrust regulators seeking to block the merger of the AMR Corp. unit with US Airways Group Inc.
“If there’s a reasonable settlement, I think it’s better for both sides” than going to trial, he said following a panel discussion at a conference in New York yesterday. The suit is set for a Nov. 25 trial.
Investors have been watching for hints that an accord is possible, especially after the airlines and the U.S. Justice Department said Oct. 28 that they agreed on a mediator suggested by the court. The U.S. sued to stop the deal in August, putting at risk a tie-up that would create the world’s largest carrier.
“Any movement toward the middle is great for the airlines, because they need to get this done sooner than later,” said Jim Corridore, a Standard & Poor’s Capital IQ analyst in New York. “There’s got to be a reasonable settlement that can be reached between the DOJ and the airlines.”
AMR rose 4.3 percent to close at $7.30 in New York, extending yesterday’s 7 percent advance, while US Airways rose 0.9 percent to close at $22.58. Corridore rates US Airways as a strong buy and doesn’t follow Fort Worth, Texas-based AMR, whose shares are trading over the counter in bankruptcy.
The all-stock merger was valued at $16.6 billion yesterday, based on the closing price for Tempe, Arizona-based US Airways and its stake in the new American, which is counting on the deal as its exit strategy from Chapter 11 protection.
“It’s incumbent on us to make a very strong case and be ready to help bring about a sensible settlement,” Horton said, without elaborating on what an accord might entail. “I think there’s a way to do that.”
Rich Parker, an attorney for US Airways, declined to comment on any settlement discussions at a meeting with reporters outside the federal court in Washington today. The Justice Department also declined to comment yesterday, according to Gina Talamona, a spokeswoman.
In an appearance on Oct. 16 at Dallas-Fort Worth International Airport, Horton wouldn’t discuss the prospects for an agreement, saying that American and US Airways were open to a “sensible, common-sense” settlement.
Yesterday, he cited the airlines’ Oct. 1 settlement with the state of Texas, which had joined the federal suit, as a reason for optimism in the U.S. case.
“I think there’s a way to get there,” Horton said at the Buttonwood Gathering 2013 conference in New York. “We’re hopeful.”
The Texas agreement shows settlements also can happen with more of the six other states that joined the antitrust challenge, along with the District of Columbia, Horton said. That accord requires the merged airline to maintain a hub at DFW Airport, keep its headquarters in the Dallas area and retain service to a specific number of Texas cities.
Horton declined to comment on having a mediator in the case, identify the person or say whether any talks had begun.
The case is U.S. v. US Airways Group Inc., 13-cv-01236, U.S. District Court, District of Columbia (Washington).