Who Says DOJ Will Settle in AMR/US Airways Merger? Not Charlie Leocha
CHARLOTTE, N.C. ( TheStreet) -- Despite all the chatter that a settlement is near in the case involving the planned merger of US Airways (LCC) and American (AAMRQ), Charlie Leocha sees it differently.
Leocha heads the Consumer Travel Alliance, a non-profit consumer advocacy group, and has been among the primary voices opposing the merger. He doesn't think the case is headed for settlement, although he concedes "that may be wishful thinking on my part."
The Justice Department has sued to block the merger, with the trial scheduled to begin Nov. 25 in U.S. District Court in Washington. The two sides have said they are talking about a settlement.
"My feeling is that the DOJ will extend a possible settlement to American and US Airways, but I think it will be more than the airlines are willing to take," Leocha said Monday. "I think the case is going to go to trial. I don't have anything really to base that on, other than my general sense over the last six months, in conversations with the DOJ." He thinks DOJ would ask that US Airways be limited to 50% of the slots at Washington Reagan National Airport, too big a concession for the airlines to make.The Justice Department has spoken with various airline CEOS and other industry leaders as it prepares for trial. Leocha said he has spoken with department lawyers three times since the merger was announced, each time at his own behest. "They are taciturn," he said, making it difficult to determine what they are thinking. US Airways CEO Doug Parker had a similar impression: He told The Dallas Morning News in October that the airlines had numerous meetings and conversations with DOJ after announcing their merger plans Feb. 14, but "they never indicated, 'Oh, everything's OK, don't worry about it.' They asked questions." Leocha said he thinks DOJ is concerned about high fees in the airline industry, starting with the $200 charge at all four legacy carriers to change a reservation. Just as the Justice Department was concerned about collusion on ticket pricing in the 1990s, he said, it is concerned today about "the cozy relationship on fees." The airlines wait for one carrier to announcer a higher fee, than typically match shortly thereafter.
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