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Abbott reverses course; withdraws opposition to AMR/US Airways merger

American Airlines CEO Tom Horton, left, and US Airways CEO Doug Parker, announce merger in Feb. 2013. Photo courtesy of AP

Dave Montgomery
Austin Correspondent

AUSTIN – Texas Attorney General Greg Abbott, the Republican front-runner in the governor’s race, on Tuesday said he is withdrawing from a federal-state lawsuit to block the merger of American Airlines and US Airways after receiving assurances that the merger would not undercut service to more than 20 rural Texas airports.
The development came just two days before State Sen. Wendy Davis’ expected entry into governor’s race. The Fort Worth Democrat, a strong supporter of the multibillion-dollar merger, has warned that the suit by the Justice Department and six states threatens thousands of jobs in the Metroplex and elsewhere.

Appearing with American Airlines CEO Tom Horton in a press conference at Dallas/Fort Worth International Airport, Abbott said his decision to pull out of the suit was not based on political considerations but came after an agreement that the merged airlines would be headquartered in the Metroplex and would not diminish service to rural Texas areas.
“Our focus was on our state-centric goal, which we are walking away with in this agreement today,” said Abbott.
But Matt Angle, director of the Democratic-affiliated Texas Lone Star Project and a close adviser to Davis, said Abbott clearly bowed to political pressure in dropping out out of the suit. His original decision to file the legal action prompted a political backlash in the Metroplex, igniting criticism from pilots, community leaders and even many of his Republican supporters.
“Wendy Davis, one; Greg Abbott, zero” said Angle. “It’s pretty clear that Greg Abbott reversed field because of the pressure he was getting from Wendy Davis and other Texas leaders.”

The 56-page antitrust suit was filed on Aug. 13 by attorneys for the Justice Department, Texas, Arizona, Florida, Pennsylvania, Tennessee and Virginia and the District of Columbia.

"I'm pleased we were able to find common ground and gain the carefully considered support of the attorney general in our home state," said Horton, chairman, president and CEO of AMR, American's parent company. "This is an important step forward for American Airlines, for Texas, and for our customers and people of both American and US Airways.
In joining the suit, Abbott said he had no other choice because of what he said were obvious antitrust violations that would hurt airline competition and lead to fare and fee increases for passengers.
But he said Tuesday’s agreements with the airlines resolved the state’s primary concerns.

“From the beginning, our focus has been on maintaining service to rural airports in Texas and protecting Texas jobs,” he said. “Today’s agreement ensures that thousands of jobs will remain in Texas and that Texans traveling by air – especially those who fly in and out of rural cities across the state, including members of the military – will continue to benefit from daily flight service. The settlement secures common-sense concessions that are in the best interests of Texas.

He said the settlement “is good for American Airlines’ customers, the communities it serves and its employees” and “will preserve competition in the marketplace, maintain important routes in Texas and protect jobs.”

In addition to ensuring daily service to airports across Texas, the agreement also guarantees that DFW Airport will remain a “hub” and that, if the airlines merge, the headquarters will be located in Texas, in the DFW metropolitan area, Abbott’s office said in a press release.

Davis has signaled that Abbott’s position on the merger would be a prominent issue in a likely race against Abbott. Abbott’s GOP primary opponent, former Texas Republican Party Chairman Tom Pauken, has also blasted the attorney general for trying to stand in the way of the merger.

Pauken, in a press release, claimed victory on the issue, asserting that "political pressures more than economic or legal concerns have driven the attorney general's office to reverse course."
Davis has written to President Obama urging the Justice Department to drop the suit, saying it could jeopardize thousands of jobs both nationally and in the Dallas-Fort Worth Metroplex.

During an appearance on Sunday at a public policy conference hosted by the Texas Tribune, Davis said that no state in its “right mind” would turn away the effective relocation of Arizona-based US Airways to Texas through the merger.
“I disagree very strongly on that,” Davis said of the lawsuit. She called American Airlines “an integral part of the Texas economy” and a “very integral part of Fort Worth.’’
The Fort Worth Chamber of Commerce has estimated that Fort Worth-based American Airlines employs more than 20,000 people in the Metroplex alone and contributes to the employment of 175,000 more by vendors, contractors and others who do business with the airline.

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