Is the AMR-US Air Merger Grounded for Good?

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Aug. 20 (Bloomberg) -- Cappello Capital's Gene Urcan, Wolfe Research's Hunter Keay and Morgan Stanley's Vincent Reinhart discuss the prospects for the AMR-US Airways merger. They speak on Bloomberg Television's "Street Smart." (Source: Bloomberg)

Tell you what, let's start with you.

What is the precedent for a deal happening as large as this despite the doj lawsuit?

The department of justice has tried to lawsuit to block this $11 billion merger, which would create the largest airline in the world.

They have allowed six unprofitable airlines to merge over last five years and are breaking tradition.

They are going to test the legality of this break in tradition.

The airline utility, those are businesses, businesses need to make money.

I am not excited about potential fare increases if the merger takes place, however i think the merger is better for everyone in the industry in that it brings additional competition to united and delta.

I spoke to doug parker, he said he wants to go head-to-head with the other big airlines.

The department of justice missed this, in the market they can create a duopoly between delta and united.

The revenue energies that they identified in this merger causes market share gains.

Does this make it easier for them to fight this thing?

One of the upside to this is that they can break from tradition.

Both the american and u.s. air are going to fight.

That will result well for both airlines.

The labor unions have obviously spent a lot of time in trying to determine whether they think this is a good deal.

This puts a lot of employees in limbo, not a good thing.

The quicker they can come to resolution, the better it is.

The american airlines union agreed to the deal before it was on the books.

They are really the ones in limbo, what does that tell you?

I do not know if it tells me much.

I think that for both airlines there is a need to combine.

In the short-term american airlines is going to be fine, and in a long term i believe that america is going to be ok.

They have brand recognition and are well-known, serving many of the business hubs, as mentioned earlier.

The reality is that they serve the less profitable in places like philadelphia and charlotte.

The surprise factor, or business, the plan for these surprising revelations that come with business uncertainty?

The first question they have to answer, why did you let them merge?

Is it just the size smattering?

Uncertainty about governmental policy is detrimental to capital spending.

It gets up to a more sustained basis.

How can these companies allocate money and make decisions on capital spending?

The problem is the consumer thinks that air travel is unpleasant and that is a highly technical term.

The reality is not generated, putting in the wi-fi and operating terminals, air travel has become generally more pleasant.

With hyper regulation there are numbers.

One of the petitions -- statistics that came out , there are a couple of news markets.

They control 69%, giving up the gates to get this done.

It is unclear which remedies -- it is unclear which remedies exist outside reagan national.

More city pairs like charlotte and dallas, those are open.

That is why it is so hard many talk about specific remedies in this case.

Quickly, a final word to you, does america have a chance of succeeding?

I do.

If they go through the merger , that holds true for this case.

Last question to you, handicap this deal, does it go through?

There is a chance they are looking at a deal this year.


May be less.

This text has been automatically generated. It may not be 100% accurate.


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