CHICAGO — A federal judge sided with American Airlines and agreed to set a November trial date for the federal government's civil antitrust lawsuit challenging the airline's planned merger US Airways Group.
The U.S. Department of Justice had asked U.S. District Court Judge Colleen Kollar-Kotelly for a trial date next year. At a hearing Friday, the judge said the government's proposed timetable put the trial too far off and she set the date for Nov. 25. A spokesman for the Justice Department said the government would be ready by the November date. Both sides proposed a trial that would run 10 to 12 days and be decided by the court.
American's parent AMR Corp. was pressing the judge for the earlier date as its exit from bankruptcy is being blocked by the complaint filed last month by the government which argues that the merger would hurt competition and consumers.
The hearing before Kollar-Kotelly in the U.S. District Court for the District of Columbia came one day after the bankruptcy judge overseeing American's case in federal bankruptcy court in Manhattan indicated he was leaning towards approving the airline's proposed confirmation plan. If the plan is approved, the airline's exit would be conditioned on resolution of the lawsuit.
Judge Sean H. Lane said he found "the arguments in favor of confirmation fairly persuasive." American, its creditors' committees, and the carrier's unions have argued in favor of approving the confirmation plan even with the DOJ lawsuit pending. Lawyers involved in a private antitrust lawsuit filed against the merger argued that the confirmation plan should be put on hold until the antitrust issues are resolved.
Approval of the plan -which was assembled assuming the proposed merger would go through — would allow AMR Corp. to clear a major hurdle in its path to exit its Chapter 11 bankruptcy filed in November 2011 as it staves off further objections from parties in the case or from outside forces. The U.S. Trustee in the case does still have some objections to the plan pending.
The next bankruptcy court hearing is Sept. 12. The plan based on a merger is favored by unsecured creditors — including holders of the airline's $3.3 billion of unsecured and secured municipal bonds — because it offers full recovery for unsecured holdings. The airline also opted against challenging the status of leases tied to its secured municipal bonds as airlines attempted in past bankruptcies with mixed results.
A joint filing in the case Wednesday noted the willingness of both sides to entertain a settlement, with the government saying it would consider one that addresses "competitive harms posed by the merger," but saying it has yet to be presented with a proposal. American said it continues "to believe there ought to be a realistic possibility of settlement."