Court Allows Proposed Airline Business Merger To Move Forward

On behalf of The Law Office of Lynnette Ariathurai, A Professional Corporation posted in Mergers & Acquisitions on Wednesday, December 4, 2013.

There are many reasons that companies decide to merge with other companies. This allows the newly merged companies to utilize larger amounts of assets in order to reach business and financial goals in California or in any other state. However, there may be some proposed mergers which attract the scrutiny of critics and regulators due to fears of decreasing competition within the specified market. This was the case with the recent business merger proposed between American Airlines and US Airways.

However, after going through the proper legal process, a bankruptcy judge accepted a proposed settlement with the U.S. Department of Justice. The court's ruling enables American Airlines to exist bankruptcy and complete the business merger by early December. The court also threw out a lawsuit filed by a group of travel agents and passengers in an attempt to stop the merger. The judge stated that the plaintiffs did not prove how they would be harmed by the proposed merger.

However, now the company will still have to negotiate collective bargaining agreements with the Allied Pilots Association. The newly merged company will also have to restructure the employee seniority system in order to accommodate workers from both airlines into the newly merged business. Reports have indicated that workers believe they will benefit as a result of the merger. Passengers may also notice a difference with increased options for hubs and worldwide gateways.

As this case illustrates, a business merger in California or any other state may not be straightforward. However, if one is required to go to court in order to complete a proposed merger, it can be a good idea to have a strong understanding of all the applicable laws regulating the specific industry. Business owners will likely need this knowledge to create a strong legal argument to convince a judge to allow the merger to move forward.

Source: NBC 4, Judge Approves DOJ Settlement, Clears AA for Merger, Kendra Lyn, Nov. 27, 2013

Recent Posts