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Overview:
The proposed United-US Airways merger, if approved, would come on right after the Justice Departments recent approval of American Airlines takeover of struggling TWA. The two deals would leave two companies, American and United, controlling more than 45 percent of US commercial air travel, which is an unprecedented situation. ... The new United would dominate 1,156 of the 5,000 most heavily traveled markets, affecting 61. ... Claims arose that if the merger was approved, the new company would alter the existing balance in the domestic market. ... The proposed deal between United Airlines and US Airways had been positioned so that it was expected to be approved, although several iterations of adjustments were expected to be necessary. ... Therefore the Justice Department had requested for more time to study the merger. ... The DOJ was concerned about the strength the revised deal would give to both American and United, particularly on the East Coast. ... United used their extensive resources available within this major corporation. United hired Longmuir as senior counsel based out of their Washington office in 1993. ... The businesses expected that the new republican president and administration would be in favor of the merger. ...
United and US Airways argued that economic forces required them to merge. The airlines both claimed the merger was necessary for both airlines in order to survive and not be at risk to have to file for chapter 11 protection. ...
Public opposition to the proposed merger started building with fears that it would lead to less competition, increased control, higher prices and start a new wave of mergers and consolidation in the industry. ... In addition, they stated if this merger was to go through the effects of potential strikes or even slowdown could be devastating. The new United would have over 25 percent of the total market. ... Twelve states planned to join the Justice Department in blocking the merger. ... There were also politicians that spoke up for merger, that it would help assure service in their state such as when American acquired TWA. ... One obstacle came from the International Association of Machinists, with approximately 60,000 employees at United and US Airways. According to United, the airline offered the union great protection against possible furloughs and moves that would be required as part of the merger. The union said they had no choice but oppose the merger as it was structured. In addition, Uniteds flight attendants, represented by the Association of Flight Attendants, said that they would follow through with their threat to block the merger, and perhaps strike unless United adjusts the conditions of the deal. ... Going ahead with the merger without a waiver would be illegal. ... United had already negotiated a similar waiver with the pilots, yet refuses to provide the flight attendants with equal treatment.
Competitors also joined in the opposition of the merger. ... Customers, communities and airline employees all would pay the price if United, US Airways, TWA and American combine into two super-carriers. Delta CEO said he preferred the current competitive situation but would be forced to enter serious merger discussions if the United and American deals went ahead. ...
The US Airways stockholders had suffered a big casualty. With no profits, and management out of focus thinking about the post merger instead of running the airline, the only thing that kept the stock price at a reasonable level was the proposed deal.
Approximate Word count = 2695
Approximate Pages = 10.8
(250 words per page double spaced)
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