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Doug Parker was CEO of a regional airline when he saw an opportunity: buy US Airways, which was bankrupt and at risk of liquidation. He pulled it off; the combined airline was called US Airways. This year, he saw a similar opportunity: buy the bankrupt American Airlines -- and create the biggest airline in the world.
And today, the Department of Justice said no. It filed an antitrust lawsuit to block the merger . DOJ antitrust chief Bill Baer said he’d be open to discussions, but he thought the best result would be for the merger not to happen; DOJ says the airlines would then be able to stay in business independently.
What’s best, of course, depends on your frame of reference—best for whom, and for what purpose? American’s creditors not only approved the merger , it was the creditors committee that pushed the airline’s CEO to consider it. They think they’ll get the best payoff on the debts American owes them that way. US Airways’ stockholders think the deal is good for them, too: they approved the merger .
But antitrust law takes a different perspective. It seeks low prices for customers. The government argues that if this merger goes through, it might to lead to higher prices. That is, the government thinks that with more assets and fewer competitors, the merged American Airlines might charge higher prices, and customers would willingly pay them.
If DOJ wins, what Doug Parker will get for building his way to this massive deal , and what US Airways’ investors and American’s creditors will get for their money, is to have their best interests sacrificed on the altar of cheap airfares. Granted, most of us want cheap airfares. But a government that sacrifices some people's achievements to others' mere desires is in no one's interests.
Parker says he'll fight the case .
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