May 11--The judge in the American Airlines bankruptcy case officially signed off
on the proposed merger agreement with US Airways, moving over another barrier
toward the end of a court journey now 17 months old and counting.
The move clears the way for American Airlines to continue to gather support for
the bankruptcy reorganization plan that it submitted to the court last month.
The $11 billion merger with US Airways is central to that plan, creating the
world's largest airline with nearly 100,000 employees.
U.S. Judge Sean Lane's signature comes more than six weeks after he heard the
motion during a March 27 hearing, in which he also struck down the part of the
agreement giving AMR Corp. CEO Thomas Horton a $20 million severance package.
In the order Lane said again that he was not approving the $20 million deal that
would see Horton step down as CEO of the company and make way for US Airways CEO
Doug Parker when the companies combine.
"The CEO Letter Agreement is not approved," Lane wrote.
U.S. Trustee Tracy Hope Davis objected to the payout for Horton on grounds that
it violates bankruptcy law that limits payouts and severances to executive
management.
Lane agreed and said in a previous ruling that he couldn't approve it as part of
the bankruptcy process but that Horton and the new company would be free to make
their own deal at a later time.
American Airlines has continued to push the court to make the severance an
official part of the bankruptcy process and has resubmitted the payout proposal
as part of its bankruptcy reorganization plan.
The court has scheduled a June 4 hearing for American Airlines to officially
present its reorganization plan, and then it will have 60 days to persuade
creditors to endorse the deal.
American Airlines officials have indicated that they still plan to emerge from
bankruptcy, gain regulatory approval and officially merge with US Airways by the
end of September.
kyle.arnold@tulsaworld.com
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