Regional News

DOJ Should Drop Suit Against American's Merger: Miami-Dade

BRADENTON, Fla. - The Miami-Dade County Commission wants the U.S. Department of Justice to dismiss the antitrust suit it filed to block the merger between US Airways Group Inc. and American Airlines’ parent corporation, AMR Corp.

The merger, the commission argues, will benefit Miami International Airport where American is the single-largest carrier. MIA is also a key hub for the airline.

The proposed merger will result in a stronger airline that continues to support MIA, which is the county’s largest economic generator, the commission said in a unanimous resolution adopted Wednesday.

Blocking the merger could weaken the airport as a hub and “result in a period of prolonged uncertainty, which could impact growth, development, and investment at MIA,” said the resolution proposed by Commissioner Dennis Moss. This resolution asks for reconsideration of the decision to litigate, he said.

Miami-Dade Mayor Carlos Gimenez urged the Justice Department and Florida Attorney General Pam Bondi, to reconsider their opposition to the merger during a press conference last month. Bondi and five other state attorneys general joined the antitrust suit, along with Washington, D.C.

“From our vantage point, the anticipated merger of two of our nation’s legacy carriers would have an undeniably positive effect on our community: more jobs for our residents, new routes and greater access for locals and visitors to take advantage of, and increased opportunities for commercial activity via an expanded network,” Gimenez wrote in an Aug. 20 letter to Attorney General Eric Holder.

Neither American nor US Airways can compete effectively with the country’s two largest carriers – Delta and United – which “grew exponentially in size when federal regulators endorsed their mergers,” Gimenez wrote.

“Worse, these two carriers both operate hubs in Atlanta and Houston, which directly compete with MIA for international traffic,” Gimenez wrote.

The antitrust litigation is “anti-competitive as it locks in structural advantages Delta and United gained through their respective mergers while depriving American of the benefits of consolidated operations and networks that have accrued, and continue to accrue, to Delta and United,” he said.

Miami-Dade is at odds with Florida on the issue, Bondi defended the state’s position.

“This merger would be anti-competitive and harmful to consumers, with 20% of the problematic flight routes affecting Florida,” she said Aug. 13 when the suit was announced. “By filing this lawsuit, we hope to save consumers from potential multi-million dollar increases in prices and fees.”

American Airlines filed for Chapter 11 bankruptcy in November 2011.

In addition to being the top revenue producer for MIA, American is a major financial backer of the airport’s $2.9 billion terminal renovation project, which is part of a $6.49 billion, largely bond-financed capital improvement plan.

Miami-Dade County, which owns the airport, had a $25 million claim listed on American’s filing, which was due to the county in varying amounts between 2012 and 2014 for the north terminal project built largely for American. Another $3.7 million trade debt claim also was listed.

“American has paid all of its pre-petition debt and is current on all its post-petition obligations,” said MIA Chief Financial Officer Anne Syrcle Lee. “American has stated that it intends to add flights and routes, and to date has done so as planned.”

Miami-Dade had planned to sell $794.3 million of airport revenue refunding bonds and $53.32 million of new money bonds for MIA in August, but the deal was postponed due to rising interest rates.

“We will be re-evaluating market conditions this month with our underwriters and financial advisors to determine if the offering is in the money and meets county criteria,” Lee said.




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