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Court Okays American Airlines-US Airways Merger
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On Wednesday, U.S. Bankruptcy Judge Sean Lane approved AMR Corp’s plan to merge with the US Airways Group, while at the same time postponing the approval of the $19.9 million severance package for AMR’s outgoing CEO, Tom Horton. The merger is supposed to create the world’s largest airline.

Speaking on the severance package of Horton, Lane said that he thought that Horton’s severance package should be part of the restructuring plan and he was in doubts whether it merited or required a separate court approval.

If the severance package were included in restructuring, then the version of the merger agreement that received the court’s approval would need to be amended and resubmitted.


A lawyer for AMR’s creditors’ committee said, “The companies said they were prepared to amend the merger agreement in any respect, and I expect that there will be an amendment.”

AMR Corp had announced the deal last month, but the plan required both regulatory approval as well as approval from the bankruptcy court. However, AMR Corp still requires to create a formal restructuring plan integrating the merger to meet required approvals before it can emerge from bankruptcy.

The court approval on Wednesday was significant for AMR Corp in stepping towards the end of its bankruptcy. Initially, AMR Corp, which had filed for bankruptcy citing unsustainable labor costs, was fully opposed to a merger while in bankruptcy. However, pressure from creditors’ committees made it change track and accede to a merger.

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US Airways made tentative deals with the unions last year, much before AMR Corp decided to take the merger option seriously.

According to the agreement, the Chief Executive of US Airways, Doug Parker would serve as the CEO of the new airline, while Horton will serve as chairman through the first meeting of shareholders. Following the first meeting with shareholders, Horton will exit and Parker would assume the chair.



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