CHARLOTTE ( TheStreet) --Within the airline industry, it seems ridiculous that the antitrust division of the Justice Department would sue to prevent a merger between US Airways (LCC) and American (AAMRQ). Outside the airline industry, the perception is a bit different.
Kapoor believes a settlement is likely. While the DOJ case is strong, the airlines "are going to blitz the DOJ," he said. "You can tell (that) by the quality of lawyers they have retained. They are going to push for a trial before the end of the year, which in a case of this magnitude is very aggressive. They are banking on the fact that the DOJ is extremely resource-constrained - they have the Apple (APPL) case and they just closed four offices. So there is an incentive on the DOJ side to settle."
"Very few merger cases go to trial," Kapoor said. "Here's why: the length of time for the trial is usually enough to kill the deal. Once the DOJ files a complaint, they typically either abandon it or negotiate a fix."The airlines' attorneys mocked the DOJ's complaint during a news conference on Wednesday, but also said they saw it coming - which raises the question: why didn't they share this view with their clients? When a reporter asked whether the attorneys were surprised by the suit, Paul Denis, who represents US Airways, responded that the DOJ's investigation had taken seven months, and that "You're never surprised, when you're in an investigation that long, that (it) ends up in the government challenging. If you are surprised, you obviously weren't paying attention. "We were surprised that the complaint was not stronger since we usually expect the government to put on a better case than we've seen in this complaint," Denis added.
Check Out Our Best Services for Investors
- $2.5+ million portfolio
- Large-cap and dividend focus
- Intraday trade alerts from Cramer
Access the tool that DOMINATES the Russell 2000 and the S&P 500.
- Buy, hold, or sell recommendations for over 4,300 stocks
- Unlimited research reports on your favorite stocks
- A custom stock screener
- Model portfolio
- Stocks trading below $10
- Intraday trade alerts