US Airways Group Inc (LCC), AMR Corporation (AAMRQ): The Law & The DOJ

But one thing about negotiations is that having more bargaining power is a good thing. We don’t know what has been happening behind closed doors, but if the DOJ couldn’t get the concessions it was seeking from the airlines, a lawsuit to block the merger would help to increase the department’s bargaining position. The airlines would get to watch as their share prices plummeted and they would return to the negotiating table eager to close the merger. And the talk about route concessions not being enough? What better bargaining position to start with when negotiating route concessions than that route concessions aren’t enough?

DOJ settlement
Players at both the airlines and the DOJ are doing the typical corporate-merger trash-talking, but eventually the same players will probably return to the table. If the DOJ is fundamentally opposed to the merger, any settlement would be very difficult. But if this is a bargaining power strategy by the department, then negotiations will continue behind closed doors while the court battle rages on.

A settlement from the negotiations would have to be carefully crafted, since the relatively small number of other large carriers would be interested in forfeited routes as well. The DOJ would have to make sure that in preventing an American Airlines monopoly on a route, it doesn’t turn it into a Delta or United Continental monopoly.

As is often the case, investing involves following both the corporate and legal sides of companies. And the US Airways-AMR Corporation (OTCMKTS:AAMRQ) merger would be among the contenders for most interesting court battle of the year.

The article What Chance Does American Airlines Group Have? originally appeared on Fool.com is written by Alexander MacLennan.

Alexander MacLennan owns shares of Air Canada and Delta Air Lines. He is also long $17 January 2015 US Airways calls, and long $22, $25, and $30 January 2015 Delta calls. This article is not an endorsement to buy or sell any security and does not constitute professional investment advice. Always do your own due diligence before buying or selling any security. The Motley Fool has no position in any of the stocks mentioned. 

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