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TheStreet Open House

The Deal: Early Airline Trial Might Work Against Strapped DOJ

NEW YORK ( The Deal) -- The demands of the legal system favor a quick path to trial for the Department of Justice's attempt to block the proposed merger of US Airways Group (LCC) and American Airlines, a fact that could put the government at a disadvantage in the case.

Lawyers for the air carriers have requested to begin the trial on Nov. 12, three months earlier than the Feb. 10 start the DOJ is said to prefer. The lawyers said they expect the trial to require 10 court days. If the earlier date is picked, antitrust experts said it will be difficult for the Justice Department to prepare adequately.

Which is exactly what the airlines want, antitrust experts say, as the airlines use their huge legal team to try to outgun the constrained staff numbers of the DOJ.

But there are other reasons why Judge Colleen Kollar-Kotelly of the U.S. District Court in Washington might have little choice but to pick a date on the earlier side.

The DOJ's lawsuit has halted a U.S. bankruptcy court's efforts to rule on the reorganization plan for American's parent, AMR Corp. (AAMRQ), which currently calls for the company to be acquired by US Airways. The DOJ's lawsuit against the merger came two days before American presented U.S. Bankruptcy Judge Sean Lane with its reorganization plan. Because of the merger challenge, Lane has asked involved parties to brief him on whether or not the plan should go ahead. He will hold a hearing on the question Aug. 29, in Manhattan.

Kollar-Kotelly's calendar also favors a trial date sooner rather than later. She has warned the parties that a criminal trial is set to begin Jan. 14 and last eight weeks. If she schedules the merger trial to begin after the New Year it's unlikely that she would feel comfortable with a date any earlier than March 11, eight weeks after the criminal trial's start. A 2014 start would make it difficult to hold the bankruptcy reorganization plan together, however.

"The parties' urgency to complete their transaction is far greater here than in ordinary merger cases," the air carriers' lawyers wrote in their brief filed with Kollar-Kotelly Thursday. "American's ongoing bankruptcy proceedings compound the costs and uncertainties associated with the delays caused by the government's lawsuit, including approximately $500,000 in bankruptcy-related professional fees alone every day that the bankruptcy continues. Both Airlines face additional burdens until this uncertainty is resolved, including uncertainties in winning customers and retaining people when no one knows for sure what the future holds."

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