Sunday, December 17, 2017
Business

Justice Department sues to stop American Airlines, US Airways merger

DALLAS — American Airlines and US Airways executives expected to spend this week cruising toward completion of their huge merger, a deal to create the world's biggest airline worth $14 billion on paper.

Instead, they were stunned Tuesday when the federal government and six states, including Florida, sued to block the deal. The government contends it would hurt competition and cost consumers hundreds of millions of dollars a year in higher fares and extra fees.

Antitrust regulators had done little to interfere with three other big airline mergers in the past five years, so they were not expected to stand in the way of American and US Airways. But this latest deal would leave four airlines controlling more than 80 percent of the U.S. air-travel market.

"By further reducing the number of legacy airlines and aligning the economic incentives of those that remain, the merger of US Airways and American would make it easier for the remaining airlines to cooperate, rather than compete, on price and service," the lawsuit said.

The Justice Department turned the words of US Airways leaders against them. The 56-page complaint filed in federal district court in Washington, D.C., was peppered with quotes from internal emails, investor presentations and public comments in which top executives noted that previous mergers had helped lead to higher fares and higher fees to check a bag or change a ticket.

"We will fight them," declared US Airways CEO Doug Parker, who would run the combined company.

Paul Denis, a Washington antitrust lawyer hired by US Airways, said that Tuesday would be the Justice Department's "best day" in the matter.

"They got to hold their press conference. Now they've got to try their case in court," he said.

Tom Horton, CEO of American Airlines parent AMR Corp., said the companies had spent months trying to convince the Justice Department that the merger would help customers and boost competition by creating a tough new rival to larger airlines United and Delta.

AMR has been operating under bankruptcy protection since November 2011. It has cut labor costs, renegotiated aircraft and other leases and earned $220 million profit in the second quarter — its first profit in the April-to-June period in six years. It is forging ahead with an order for hundreds of new airplanes.

American and US Airways had been so confident of a quick merger that they had already named executives for the combined company, which was to be based at AMR's headquarters in Fort Worth and called American Airlines Group Inc. Executives at Tempe, Ariz.-based US Airways have been house-hunting in the Dallas-Fort Worth area.

The lawsuit may put some of those real estate deals on hold. Daniel McKenzie, an analyst for Buckingham Research Group, said the merger went from a 99 percent probability to around 50 percent.

It's possible that the lawsuit will never go to trial. Analysts said the Justice Department could be seeking more time and leverage to squeeze concessions from the companies, such as giving up some of their precious takeoff and landing slots at Reagan National Airport, which would create room for new competitors at the busy airport across the Potomac River from Washington.

The Justice Department, which was joined in the lawsuit by the attorneys general of six states and the District of Columbia, said the merger would cause "substantial harm" to consumers by leading to higher fares and fees.

"This merger would be anti-competitive and harmful to consumers, with 20 percent of the problematic flight routes affecting Florida. By filing this lawsuit, we hope to save consumers from potential multimillion-dollar increases in prices and fees," Florida Attorney General Pam Bondi said in a prepared statement.

Government lawyers cited examples in which US Airways operates one-stop flights that undercut nonstop flights by American and other rivals by hundreds of dollars. After the merger, they said, US Airways would drop that practice, pushing fares higher.

On news of the lawsuit, US Airways shares fell $2.46, or 13.1 percent, to close at $16.36. AMR shares were taken off the New York Stock Exchange shortly after the company filed for bankruptcy protection but still trade over the counter. They were down $2.64, or 45.4 percent, to $3.17.

   
Comments

Bitcoin futures begin trading on CME, price little changed

NEW YORK — Another security based on the price of bitcoin, the digital currency that has soared in value and volatility this year, began trading on the Chicago Mercantile Exchange on Sunday. The CME Group, which owns the exchange, opened up bitcoin f...
Updated: 5 hours ago
Fueled by indulgence and machismo, restaurants are a hotbed for sexual harassment

Fueled by indulgence and machismo, restaurants are a hotbed for sexual harassment

When Brenda Terry was 16 and living in St. Louis, she was a host and food runner at a sports bar where female employees wore cute little cheerleading skirts. One night, she said, a patron grabbed her crotch. She ran to her management team and they de...
Updated: 7 hours ago
Taxpayer subsidies of Tampa golf courses are on the rise as struggles continue

Taxpayer subsidies of Tampa golf courses are on the rise as struggles continue

TAMPA — For the half of the year that Harry Nichols lives in Oldsmar, he plays 18 holes several times a month at Rocky Point Golf Course. On a good day, Nichols said he shoots close to par on the Dana Shores course. And if he’s really lucky, it’ll on...
Published: 12/15/17
Updated: 12/16/17
Pigs can be therapy animals too. So can horses and rats and cats and llamas and … (w/video)

Pigs can be therapy animals too. So can horses and rats and cats and llamas and … (w/video)

Shrieks of laughter echoed off the walls of the hospital as Thunder the mini pig flopped onto his side and the children huddled around him, scratching his pink, hairy belly. He and his wet-nosed partner, Bolt, drew patients in wheelchairs and bandage...
Published: 12/15/17
Vology landlord challenges property tax assessment

Vology landlord challenges property tax assessment

LARGO — Eight months after paying $10.15 million for the office building that houses IT services company Vology, a New York company is suing the Pinellas County Property Appraiser and Florida Department of Revenue contending its $5.5 million tax asse...
Published: 12/15/17
Florida’s $1.1 billion Hardest Hit Fund winding down after some hard knocks

Florida’s $1.1 billion Hardest Hit Fund winding down after some hard knocks

In 2010, Florida was in the throes of an unprecedented housing crisis. One in every eight homes was in some stage of foreclosure. Today, the foreclosure rate is one in every 83. Because of that enormous drop, Florida’s Hardest Hit Fund will s...
Published: 12/15/17
Report: Rich will get still richer unless policies change

Report: Rich will get still richer unless policies change

By ELAINE KURTENBACHTOKYO — Global inequality has stabilized at high levels in recent years, a report said Friday, despite gains among the poor in China and much milder disparities in incomes and wealth in Western Europe. The World Inequality Report ...
Published: 12/15/17
How the Disney/Fox deal will shake up Hollywood

How the Disney/Fox deal will shake up Hollywood

Associated Press NEW YORK — After years of tremors, the earthquake that had long been predicted finally shook Hollywood. Disney’s deal to purchase most of 21st Century Fox ends the era of the "Big Six" major movie studios, toppling one ...
Published: 12/15/17
St. Petersburg’s Museum of the American Arts and Crafts Movement set to be complete in 2019

St. Petersburg’s Museum of the American Arts and Crafts Movement set to be complete in 2019

ST. PETERSBURG — The Museum of the American Arts and Crafts Movement, under construction since 2015, is scheduled to be complete by the summer of 2019.The five-story, 137,100-square-foot building will house businessman and collector Rudy Ciccarello’s...
Published: 12/15/17
Obamacare enrollment ends today, but some can get an extension

Obamacare enrollment ends today, but some can get an extension

Today is the day that open enrollment for the Affordable Care Act will close for most people. But those affected by the slew of hurricanes that pummelled Florida, Texas, Puerto Rico and other states earlier this year can take advantage of a two-week ...
Published: 12/15/17