No doubt divestiture of slots at Washington Reagan National would be a key element in a deal. National is the only airport discussed in detail in the DOJ's complaint. US Airways has long been aware of "the National Factor" in getting deals past DOJ. Washington regulators routinely fly out of National. Look around National and you would think that US Airways is most certainly the biggest most powerful airline in the world. This is true of any airline in any of its major hubs, and it is difficult to imagine that it is not an important psychological factor in regulatory decisions.
In its 2000 proposal to merge with United, which dominates Washington Dulles, US Airways went so far as to propose spinning off National entirely.
As for the other problem cited in the DOJ complaint, which is that some low-cost fares on 1,034 one-stop routes could disappear in a merger, maybe the DOJ could get creative. Peter Golder, a professor at Dartmouth's Tuck School of Business, has suggested that the agency find a way to preserve the opportunity to award slots and gates at congested airports to carriers that don't exist yet. "This is the last chance to think about (preserving competition) in a comprehensive way," Golder said. "An option for the future can be written into this deal."
Here, we must say that readers can be excused for discounting any speculation coming from the airline industry, including its analysts and reporters, about the DOJ and what it might or might not do. After all, when it came to assessing whether the DOJ would approve the merger, every airline analyst, every airline reporter and every airline executive assumed that the response would be positive -- although many thought divestiture at National could be required.On Thursday, two veteran airline industry analysts disagreed on what might happen next. Jim Corridore of S&P Capital IQ raised his rating on US Airways shares to strong buy from buy, based on press reports that a settlement could occur. "We think the merger should not have been blocked, and believe it is feasible that the divestiture of slots at Reagan National will help reach a settlement," Corridore wrote. "With LCC shares at an extreme discount to peers, we find the stock compelling." Corridore has a $26 price target. The shares closed Thursday at $15.96, up 62 cents.
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