United Airlines' $4.3 billion plan to carve up US Airways with the aid of an American Airlines scalpel faces further regulatory delay and labour obstacles, although American's $742 million take-over of Trans World Airlines has passed nearly all the legal hurdles before it.
The antitrust authorities at the Justice Department, putting off a 2 April deadline for a decision on clearing United's buyout of US Airways Group, requested more details of United's plan to sell some US Airways assets to American.
On 10 January United and American had agreed a $1.2 billion sale of airport gates and aircraft to take place immediately after it closed the US Airways take-over. American would also jointly operate the lucrative US Airways Shuttle in the Northeast and fly some key routes either in competition or in co-ordination with the merged United/US Airways.
United played down the antitrust request for more details, saying that it had been only weeks since American became part of the US Airways carve up. The antitrust regulators could delay the transaction further if they decide to ask for more details.
American made a $500 million offer for TWA at the same time that it stepped into the United takeover of US Airways, although the two deals were separate and the TWA transaction was conducted under auspices of the bankruptcy court overseeing TWA's third reorganisation. American expects to close the TWA transaction this month.
At the same time that the antitrust probe of the US Airways transaction was extended, opposition to the deal from both machinist and flight attendant unions intensified. The International Association of Machinists, which represents workers at both United and US Airways, broke off talks on the subject of a new contract with United when satisfactory job-protection guarantees were not forthcoming from the carrier.
The Association of Flight Attendants threatened job actions when a negotiation toward job-protections and a pay rise that was promised earlier broke down. The machinists are not threatening a strike, and it is by no means clear if the flight attendants could legally strike or slow down operations. But the mere mention of a union action is enough to shake already shaky public confidence in a carrier and drive fliers elsewhere.
The delay in examining the transaction would last at least 21 days and could be extended were the regulators to request more data. But the request that caused this delay is already the second.
United insists that the merger is on course and that it is simply complying with information requests. United and US Airways say they now have a flexible approach to the merger closing date, which originally was 1 January.
Source: Airline Business