U.S. sues to block AMR-US Airways merger; stocks fall
This story is interesting to me, but I don't claim to know that much about the background, nor am I any kind of a stock market expert. I only know what I've been told by people who are not disinterested observers because of their own involvement. Because of my church's proximity to DFW Airport, a number of our members are employed by American Airlines or DFW Airport in some capacity or other. They tell me things. On the one hand, those of my acquaintances who are members of various AA unions seemed to be in opposition to the merger because it would severely negatively effect their retirement vesting. One friend told me he would lose 50% of his retirement in the merger. On the other hand, AA justified the merger as necessary to the company's survival. The market's response in the valuation of US Airway's and American's stock—particularly the 44.5% loss of value for AA—seems to indicate that there is some truth to the notion that AA's survival indeed depends on a merger.WASHINGTON - The U.S. Justice Department sued on Tuesday to block the merger of American Airlines' parent company AMR Corp and US Airways Group Inc, saying the deal would hurt consumers by leading to higher fares and fees.
The $11 billion merger would create the world's largest airline, after four other major U.S. carriers combined in recent years, narrowing the field of large U.S. airlines.
The antitrust lawsuit, filed in U.S. District Court for the District of Columbia and joined by several states including Arizona and Texas, drew concern from industry experts and support from consumer advocates.
US Airways fell 8.4 percent at $17.23. American shares, which are thinly traded, were down 44.5 percent at $3.22.
I had no idea that the state of Texas was involved in the merger or in trying to prevent it until reading this article. I know that some of you know a lot more about this stuff than I do, and I'd be interested in what you think.
