There is now speculation that there might be talks going on between the Department of Justice and American Airlines and US Airways to settle the lawsuit the DoJ has brought against the two airlines.

The speculation is largely born out of the fact that Texas Attorney General Abbott got a “settlement” deal with the two airlines and was made happy.

The truth is that that settlement was window dressing.  The Texas AG got nothing past what AA had already offered in many discussions.  The offer was merely put on paper and signed.

I do not think there is a deal to be made with the DoJ and I think those hoping for it are ignoring the fact that the DoJ has backed itself into an ugly corner by even filing the lawsuit.  There were other choices they could have made in August.  One would have been to enter into negotiations for what the DoJ would think necessary to improve competition.  The fact that that was’t the next step speaks loudly to the intent of the DoJ.

Lawyers are people and the leaders of these lawsuits didn’t get where they are by changing their minds.  The amount of ego that would have to be swallowed by both DoJ Attorney General Holder and the lead Deputy AG Baer would be very large.  It’s hard to imagine either man swallowing such a change and it’s hard to imagine a deal that allows either to save much face in the process.

Look for a trial starting on November 25th.  I still think the airlines win this trial and I think that will be even worse for the DoJ.  The Department of Justice is free to shock and surprise me with a deal but if one comes about, it won’t substantially change the merger between the two airlines except for in Washington DC at Reagan National airport.

Filed under: Airline News, Mergers and Bankruptcy by ajax
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