U.S. Gives Final OK to American-AirCal Deal
The Transportation Department gave final approval Monday to American Airlines’ acquisition of AirCal, saying that the deal, valued at about $225 million, “is not likely to substantially lessen competition or to be inconsistent with the public interest.”
The department had given tentative approval to the merger on Feb. 20.
American said it expects that the integration of AirCal into American will be complete by about July 1.
Although American said it hopes to offer all of AirCal’s 3,400 employees jobs at American, some difficulties are expected in meshing the work forces of the two companies.
“We have said all along that once the merger received final approval we will set up meetings with the unions to discuss issues arising out of the combination of the two companies,” Alton W. Becker Jr., an American spokesman, said.
“They have unions and we have unions,” Becker added. “They have pilots and we have pilots, and they have flight attendants and we have flight attendants. There are issues that will have to be worked out.”
David Sylvester, airline analyst with the San Francisco brokerage house of Montgomery Securities, said pilot seniority will be the major stumbling block.
“Seniority is the bible of all pilots’ careers,” he said. “It will take some time to do it (integrate the work forces).”
In some other recent mergers, because of labor union concerns, the deals have been made final and the companies involved have otherwise merged before full integration of work forces has been possible.
In the statement of approval issued Monday, the Transportation Department noted that the acquisition of AirCal by American “will not substantially affect the national market.”
American’s share of that market will increase to 15.4% from 14.7%, the department said.
It added that the acquisition appears “unlikely to cause substantial reduction in competition on the routes where both carriers provide . . . service, since other carriers provide competitive service.” The routes referred to in the comment are Portland, Ore.-Seattle, Chicago-Orange County, Chicago-Portland and Chicago-San Francisco.
