Abbott Announces Settlement Over American Airlines Merger

Updated, 3 p.m.:

The state of Texas has reached a settlement agreement with American Airlines and US Airways over the two airlines' proposed merger, Attorney General Greg Abbott announced Tuesday.

Under the deal, American Airlines agreed to ensure that the merged airline would maintain daily service to 22 Texas airports for at least three years following the merger. The merged company would also continue to maintain its headquarters in the Dallas-Fort Worth area and operate in Dallas/Fort Worth International Airport as its official "large hub airport" for three years, under the deal.  

“The result is a settlement agreement that serves the best interests of the people of Texas and ensures that daily service will continue to 22 airports across the state," Abbott said at a joint news conference with American Airlines CEO Tom Horton at Dallas/Fort Worth Airport.

Under the agreement, the attorney general's office agreed to "dismiss with prejudice" its earlier opposition to the merger filed in federal court.

Horton said American Airlines is committed to operating in Texas.

“And one of the reasons we are is because it is a pro-business state, and I think the attorney general is a great example of the pro-business attitude of our state,” Horton said.

At the news conference, Abbott faced several questions from reporters about how the concessions American Airlines had agreed to under the deal are different from what the company had publicly said it would do since announcing the merger. Abbott said the deal with his office is “legally binding.” He also insisted that the merger, until now, had been "filled with uncertainties" that put the state in a bad position.

"The challenges that we’ve seen in the aftermath of some other airline mergers, there was uncertainty that there would continue to be daily service, especially to all these rural airports," Abbott said.

Abbott, who is running for governor, said his actions in the suit were not impacted by criticism from fellow Republicans, business groups and state Sen. Wendy Davis, D-Fort Worth, who is expected to launch a gubernatorial campaign this week.

“We get used to that and are unpersuaded by popularity or lack thereof,” Abbott said.

After the news conference, former state GOP Chairman Tom Pauken, who is also running for governor in the Republican primary, said he welcomed the new tack but called Abbott's explanation of it "disingenuous."

"It's a face-saving device on his his part. It's a complete flip-flop," Pauken said. "I'm glad he did the right thing, but the only reason he did it was because of politics, and he should be honest and admit it."

Prior to the announcement, Matt Angle, director of the Lone Star Project, a group that supports Texas Democrats, had argued that Abbott was reversing himself under pressure from Davis, who had been critical of Abbott’s position.

“It’s pretty clear, Greg Abbott caved after receiving withering criticism for trying to kill the merger and risk thousands of Texas jobs,” said Angle, an informal adviser to Davis.

During the news conference, Angle tweeted: “Here is @GregAbbott_TX's merger comments translated - @WendyDavisTexas made me do it.”

In August, Abbott joined a federal lawsuit with the U.S. Department of Justice opposing the airlines' merger. In the original announcement, Abbott's office described the lawsuit as grounded in "the State’s concerns about the potential for reduced airline service to several of Texas’ smaller airports that are currently served exclusively by American Airlines and American Eagle flights." It also cited concerns that the merger could lead to "decreased competition, higher airfares and fees, reduced service and downgraded amenities."

Original story: 

Attorney General Greg Abbott is scheduled to hold a news conference with American Airlines CEO Tom Horton on Tuesday afternoon, prompting speculation that Abbott is adjusting his opposition to the Fort Worth-based airline's merger with US Airways.

Abbott, who is running for governor, has drawn criticism from business groups and political opponents for his decision to join with the U.S. Justice Department in fighting the merger. The attorney general's office did not immediately respond to requests for comment ahead of the news conference. 

American Airlines and North Texas leaders have insisted that the merger is critical to the survival of American Airlines, a major North Texas employer. Abbott has defended the lawsuit, arguing that the merger would reduce competition in the airline industry and lead to higher ticket prices and reduced service. Abbott's decision to appear publicly with Horton suggests some change in the AG's position. One option could be a settlement that allows both sides to frame the outcome as a win.

State Sen. Wendy Davis, D-Fort Worth, who is expected to launch her own campaign for governor this week, has also been vocal of her support for the merger for weeks.

"That was the wrong call," Davis said of opposition to the merger during a keynote discussion at The Texas Tribune Festival on Sunday.

Abbott's best-known Republican challenger, former GOP state chairman Tom Pauken, has also expressed support for the merger and criticized Abbott for joining a lawsuit with the Obama administration. Pauken said Tuesday he was no "mind reader" but predicted the attorney general would change his position on the merger.

"He's put himself in such a corner that it will be interesting to see how he justifies changing positions," Pauken said. "He probably did some polling and saw it was hurting him among conservatives and rank-and-file Republicans. He's trying to cut his losses earlier rather than later."

Also Tuesday, the Department of Justice asked a judge to temporarily halt the antitrust case against American Airlines and US Airways because of the government shutdown.