NY judge: Bankruptcy judge ‘correct in all respects’ with his OK to American-US Airways merger

NEW YORK, N.Y. – A judge refused to block a merger between American Airlines and US Airways on Friday, saying a bankruptcy judge correctly rejected arguments made by a lawyer for some consumers.

San Francisco attorney Joseph Alioto argued that the deal would harm fliers because it would result in less competition and higher prices. But U.S. District Judge Loretta Preska repeatedly noted that his arguments relied on outdated facts, had no evidence to support them and sometimes made no sense.

“There is nothing in the record from which I can make a finding that your clients are likely to be irreparably injured — personally,” she said.

American is owned by AMR Corp. and is based in Fort Worth, Texas. The company has said it plans to complete the merger with Tempe, Ariz.-based US Airways on Monday.

Preska said a federal bankruptcy judge was “correct in all respects” in deciding last week to let the merger proceed. She also refused to stay the effect of her ruling while Alioto appeals to the 2nd U.S. Circuit Court of Appeals.

Alioto complained Friday to Preska that he’d gotten “the bum’s rush, with all due respect, by the bankruptcy court.”

Preska said Alioto had failed to show consumers would suffer irreparable harm or that he was likely to succeed in his effort to temporarily block the merger until a trial could be conducted on his antitrust lawsuit. Lane said last week that even if Alioto won his lawsuit, he could demand additional divestitures by the two airlines but could not wreck the merger.

Alioto’s case lacked proof, said Attorney Dan Wall for US Airways Group Inc. “We’re here on just attorney argument and rhetoric,” he said.

The merger means American, United, Delta and Southwest will control more than 80 per cent of the U.S. market. A series of mergers in the industry since 2005 has reduced nine big airlines to four.

In August, the Justice Department had sued to block the merger, saying it would hurt competition and produce higher prices. But regulators settled their case in exchange for the airlines’ promise to surrender some coveted landing rights at Reagan National near Washington and LaGuardia in New York and a few gates at five other airports.