Court Approves Merger of American Airlines and US Airways

by San Antonio Attorney

AMR Corp and US Airways Group merger was approved by a judge on Wednesday.

The parent company of American Airlines has to create an official restructuring plan including the merger that satisfies the court and gets creditor approval so that it can exit bankruptcy.

American Airlines revealed the plan to unite with US Airways in March, an agreement that also needs regulatory validation.

U.S. Bankruptcy Judge Sean Lane turned down the plan, for the time being, a proposal of $19.9 million severance package for AMR’s chief executive Tom Horton.

According to Lane, he was uncertain whether the severance package calls for his affirmation, or if the matter should be included in the airline’s restructuring plan.

That plan will show how a debtor will pay back its creditors, and it will require the approval of creditors.

Whether or not the severance payment will be approved is unsure.

AMR and US Airways were pleased that the judge has approved their planned merger.

AMR filed for bankruptcy, stating too much labor costs after many years of ineffective efforts to work through cost savings with its workforce unions.

Its competitors went through the same route within the last decade.

AMR’s lawyer said the hearing moves the company a step closer to getting out of Chapter 11 bankruptcy, which started 16 months ago.

Initially, AMR did not want to be united with US Airways while in the bankruptcy process, but its creditors’ committee pressured the company to do it.

US Airways aggressively pursued AMR by taking advantage of the airline’s labor relationships troubles to entice its unions.

US Airways arrived at a tentative agreement through negotiation with the unions, before formal merger discussions between the two management teams had moved forward.

It is expected that the merger will close in the next quarter.


– Bankruptcy exists for business owners interested in getting out of their businesses or saving their businesses. San Antonio Attorneys who are experienced in handling business bankruptcies are valuable in saving or exiting a business through bankruptcy.

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