The heads of Embraer and Republic Airways expect the merger of US Airways and American Airlines will ultimately happen despite opposition from the US Department of Justice (DOJ).
“We still think it will go forward,” Frederico Curado, Embraer’s chief executive, tells reporters on 13 September at a ceremony in Brazil marking the delivery of the 1,000th Embraer E-Jet, an E-175 for Republic.
“I believe it will get done,” adds Bryan Bedford, chief executive of Republic, which operates Embraer aircraft on behalf of both US Airways and American.
Despite his optimism, Curado says he was as “surprised as everyone else” to learn of DOJ’s August suit to block the proposed merger, saying he thought the merger “was a done deal”.
DOJ’s suit delayed American’s exit from bankruptcy, putting into limbo a planned order by American for roughly 60 regional jets, either Bombardier CRJ900s or E-175s.
American has said that it intended to finance the aircraft with favourable export credit financing that would be available post-bankruptcy. Financing terms are “considerably less favourable” while American operates under court protection, the airline has said.
Bedford thinks the court will approve the merger if it considers the deal against the same standards used by the government to approve previous mergers of United Airlines and Continental Airlines, Delta Air Lines and Northwest Airlines and Southwest Airlines and AirTran Airways.
“If those three deals weren’t anti-competitive, than this isn’t,” Bedford says.
He adds however, that American-US Airways may need to give up some slots at Ronald Reagan Washington National airport, where the combined airline would have 69% of slots.
Concerns about Reagan slots were cited by DOJ in its lawsuit, which said the combined carrier would have too large a presence at National. DOJ also said the deal would reduce competition on thousands of connecting routes on which American and US Airways now compete.
The government added that US low-cost airlines would lack the competitive might to counter the strength of an industry dominated by Delta, United and a combined US Airways-American.
The trial is scheduled to begin 25 November.
Its unclear if Republic, which operates aircraft for both US Airways and American, would be in a position to assume more flying if American orders more regional aircraft.
Republic did not bid to operate E-175s recently ordered by United due to ongoing labour disputes with pilots, who are represented by International Brotherhood of Teamsters.
Bedford said in April that the company could not compete for the United contract due to its current cost structure.
Though he declines to speculate how the outcome of the proposed merger could affect Republic, Bedford concedes it would result in Republic losing one of its customers.
"That’s never a good development," he says.
Still, Bedford adds, “anything that makes [our] network partners more profitable ... is good for us”.