American Airlines’ proposed merger with US Airways today received a boost after the Fort Worth-based carrier’s bankruptcy judge approved the consolidation plan.
Judge Sean Lane’s approval, which was not a surprise, allows the airlines to proceed with their merger should they successfully defend against an anti-trust lawsuit filed by the U.S. Justice Department (DOJ).
That defense formally began late Sept. 10, when American and US Airways separately filed responses to DOJ’s claims, arguing that the regulator was ill-informed on the competitiveness of the U.S. airline industry, and had misjudged the merger’s implications on domestic services.
The anti-trust court case is scheduled to start Nov. 25.
Under the approved merger plan, US Airways’ leadership team will assume control of the ‘new American,’ with plans to retain both carriers’ hubs and networks. Creditors and stockholders of American’s parent company AMR Corp. will own about 72% of the new company; US Airways shareholders the remaining 28%.
The transition already had started before the DOJ’s mid-August lawsuit, with most of the senior management positions assigned and integrations teams working on consolidating operations.
Lane’s approval is contingent on American and US Airways retaining their merger plan, but should the airlines have to offer concessions to obtain DOJ backing, or lose the anti-trust case, the bankruptcy court will require another plan for reorganization from American.
During his ruling, Lane also said a severance package for AMR President and CEO Tom Horton could not be included in the reorganization plan. AMR lawyers said Horton already had requested that the near-$20 million package be dropped from the restructuring effort.