AMR, US Airways Extend Merger Agreement Deadline By A Month

(RTTNews) - American Airlines' parent AMR Corp. (AAMRQ) and airline operator US Airways Group, Inc. (LCC) agreed Monday to extend their merger agreement deadline by another month in view of the trial schedule for the civil antitrust lawsuit filed by the U.S. Department of Justice in mid-August.

"The Boards and management teams of AMR and US Airways remain committed to completing this combination to create the new American, and the extension of this outside date is a reflection of this commitment. Our focus is on mounting a vigorous defense and winning our court case so the new American can enhance competition, provide better service to our customers and create more opportunities for our employees," The companies said in a joint statement.

The deadline was originally set for December 17 that allows either of the parties to terminate the merger deal. The new deadline is now mutually agreed as the later of January 18, or the 15th day following a favorable order entered by the court on or before January 17, 2014. The antitrust trial is scheduled to begin on November 25.

Meanwhile, an unfavorable ruling by the Court will allow AMR or US Airways to terminate the merger agreement five days after the Court enters a final, but appealable, order permanently enjoining the merger.

The DoJ, along with six state attorneys general and the District of Columbia, had in August filed a civil antitrust lawsuit in the U.S. District Court for the District of Columbia against the proposed merger of AMR Corp. and US Airways, claiming the deal would jeopardize competition and inflate airfares.

The DoJ said the deal would create the world's largest airline and reduce competition for commercial air travel in local markets. The department also raised fears that passenger fares would be hiked and four airlines would dominate 80 percent of the U.S. commercial air-travel market routes.

Meanwhile, the two airlines have already obtained European Union approval for the deal in August after agreeing to surrender slots at London's Heathrow and Philadelphia in the U.S.

The DoJ's attempt to put a spanner in the works of the merger comes in contrast with earlier approved deals in the airline space. These include the 2008 purchase of Northwest Airlines by Delta Air Lines Inc., the 2010 merger of United and Continental Airlines, and the 2011 acquisition of AirTran Airways by Southwest Airlines Co. (LUV).

In mid-February, AMR Corp. and U.S. Airways agreed to merge in a stock-swap deal to create a global carrier that will have an implied combined equity value of about $11 billion. The merged entity will operate under the American Airlines name and offer more than 6,700 daily flights to 336 destinations in 56 countries. The deal was originally expected to close in August 2013.

In November 2011, AMR filed for bankruptcy amid escalating costs, and after unrelenting pressure from US Airways, the two airlines agreed to merge in February of this year.

A federal judge of the U.S. Bankruptcy Court in Manhattan on September 12 approved AMR Corp.'s plan to exit bankruptcy-court protection through a merger with US Airways Group Inc. The DoJ's antitrust lawsuit is now the final barrier for AMR to close the merger deal and exit bankruptcy.

LCC closed Friday's regular trading session at $18.89, down $0.05 on a volume of 4.99 million shares.