No doubt that by now you’re aware that they Department of Justice has decided to challenge the merger between American and US Airways.
Former American Airlines CEO Robert Crandall was interviewed on CNBC yesterday, and he was both surprised and critical of DOJ announcement.
Here’s some of what he had to say:
The government, as it so often does is compounding an earlier error, and if they didn’t want consolidation in the airline industry they never should have approved Delta/Northwest or United/Continental.
When they approved those things, they made a third major merger inevitable because Delta and United are now so big…that neither US Airways nor American can compete effectively with them…they are not sufficiently ubiquitous, they are not sufficiently sized.
…as a consequence, what the government is doing here is reducing competition, not increasing it. If I had been the King of Spain, I would never have approved any of these mergers, but if the first two are approved, the third one has to happen if we’re going to have three effective major competitors.
Anyway, here’s the video.
I was in a meeting yesterday when I received a tweet from a friend alerting me to the news that the DOJ had decided to challenge the merger.
My reaction? Complete shock.
Not so much that the DOJ had decided to oppose a merger, but they they had waited until now to make the announcement; the bankruptcy court is supposed to hold a hearing today and it’s been widely expected that the judge would approve American’s reorganization plan and okay the merger.
What was your reaction? We’re you surprised by the news?