Today’s American Airlines-US Airways merger news started with the government asking the trial court in the anti-trust case to stay the proceedings due to the government shut down.
As a pure layman that seemed like the government’s best argument yet to push things off. The government after all has long wanted a much later trial, which would likely mean they’d win by default (since large companies can’t really remain in limbo indefinitely)Nonetheless the judge wasn’t persuaded and proceedings move on.
Then come 3pm Eastern the Texas attorney general announced that this office would be pulling out of the government’s anti-trust suit which seeks to block the merger. When I first heard that a press conference had been scheduled with the Attorney General that seemed the only possible outcome. But what persuaded Texas to withdraw?
Texas got a written agreement that the airlines would do three things they’ve said they would do:
- The airline remains headquartered in the Dallas Fort Worth area
- DFW airport remains a large hub
- The airline will serve 22 airports in Texas
The Texas airports are:
- Abilene Regional Airport
- Austin-Bergstrom International Airport
- Brownsville/South Padre Island International Airport
- Corpus Christi International Airport
- Dallas/Fort Worth International Airport
- East Texas Regional Airport
- Easterwood Airport
- El Paso International Airport
- Houston William P. Hobby Airport
- Houston George Bush Intercontinental Airport
- Jack Brooks Regional Airport
- Killeen-Fort Hood Regional Airport
- Laredo International Airport
- Lubbock Preston Smith International Airport
- McAllen-Miller International Airport
- Midland International Airport
- Rick Husband Amarillo International Airport
- San Angelo Regional Airport
- San Antonio International Airport
- Tyler Pounds Regional Airport
- Waco Regional Airport
- Wichita Falls Regional Airport
I asked American how long they’ve agreed to serve all of the above airports and I was told that it’s a three year agreement. In other words, the airlines didn’t really give up anything.
It’s great optics, though it might help even more if it was other than American’s home state falling back in line. And it’s a loss to the Department of Justice on a day the Court already handed them a scheduling loss – they must proceed with the trial during the government shutdown.
But in terms of influencing the final outcome of the anti-trust trial, it means very little.
Taken together, though, American’s and US Airways’ efforts in the court of public opinion — such as sending union employees to lobby Members of Congress — could mean something, not in terms of the legal outcome of the trial but in terms of the bargaining position that the Department of Justice might take in settlement negotiations.
If enough pressure is exerted, if the case becomes enough of a liability for Congressional appropriators or for members of House Oversight with its myriad investigations of the DOJ (and especially for members of the same party that controls the Department of Justice), it could shift the parameters of what the Department of Justice would accept in the form of a settlement.
At the same time, just as the European Union’s approval of the deal doesn’t weigh on DOJ considerations, a state’s concerns being so easily mollified won’t speak to the concerns being voiced by the federal government. And the news today bears no consequence whatsoever for the legal merits of the case… just for the optics. Optics do matter.
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