As predicted, the US Department of Justice is asking/demanding/pleading for more time to prepare its case against American Airlines and US Airways.  In fact, their arguments go against precedent and seem to indicate that they may well suddenly realize that their initial arguments in their complaint are pretty weak at best.

American Airlines and US Airways want an early November court date.  The indicate they are prepared and ready to go and want a speedy trial.  They well should be in light of all the due diligence and preparation being done for a merger.

They rightly recognize that a delay could result in serious impacts.  More and more delay is simply likely to impose an outcome on the two airlines that the US DoJ wants without a trail which is to stop the merger due to untenable costs that result from being in limbo and questioned in the markets.

The US DoJ’s arguments for a March 2014 trial date are . . . not good.  We need more time because this is a big merger and, well, we need more time to stop these evil airlines.

I actually think their memo language hurts them, I really do.  Emotional arguments don’t play well with judges.

I also think that their strategy was to kill the merger with the filing of a lawsuit.  When that didn’t work and, to the contrary, resulted in a big backlash, they went to the delay tactic knowing that it would impose financial burdens that couldn’t be tolerated indefinitely.  I think their strategy is transparent, in fact.

The DoJ, in its pleading, says:

“Plaintiffs’ proposed trial-ready date of March 3, 2014, with trial starting thereafter at the Court’s convenience, would leave four months for party and non-party document discovery and fact depositions, a month for expert reports and depositions, and then a month for pretrial motions and briefs.”

The airlines’ response is that the DoJ has already enjoyed free, unfettered access to such discovery, expert reports, etc in investigating the merger in the first place.  They aren’t wrong either.  When airlines decide to merge, they lift their skirts for all at the DoJ to see.

In light of the 4 previous mergers over the past 10 years, America West/US Air, Delta/Northwest, United/Continental, Southwest/Airtran, I would argue that not only should there be a vast, significant body of research but also a vast significant body of precedent to use in a court case.

Oh, wait.  There is.  But if you use it, the DoJ loses in the first day of a trial.

That must be why more time is needed.  Creating fiction always takes more time than fact.

Filed under: Airline News, Mergers and Bankruptcy by ajax