Judge approves American-US Airways merger
NEW YORK — American Airlines won bankruptcy court approval on Wednesday to combine with US Airways and form the world's biggest airline.
“The merger is an excellent result. I don't think anybody disputes that,” Judge Sean H. Lane said before issuing his decision.
The combined airline will have 6,700 daily flights and annual revenue of roughly $40 billion. The new American Airlines will fly slightly more passengers than United, the current No. 1. It will be run by Doug Parker, CEO of US Airways Group Inc., who began pursuing a merger shortly after American filed for bankruptcy protection in November 2011.
Lane declined, however, to approve a proposed $20 million severance package for outgoing American CEO Tom Horton. The U.S. trustee had objected to the package and, while he did not question the amount, Lane agreed that the timing of it seemed to violate prohibitions in the bankruptcy law.
“Approving it today is just not appropriate,” Lane said.
The judge plans to issue a written decision at a later date detailing his reasoning.
Horton has spent nearly his entire career at American, becoming CEO when the company filed for bankruptcy. He will cede the CEO position to Parker when the deal closes, and he has agreed to leave the company's board within a year of the closing date.
The proposed severance package includes $19.9 million in cash and stock as well as a lifetime of free first-class tickets on American for Horton and his wife.
Jack Butler, a lawyer with Skadden, Arps, Slate, Meagher & Flom, said he expects Horton to get his payout. Butler's firm represents American's creditors, who backed the merger and the payout for Horton.
Separately, Lane approved a motion to extend American's exclusive period for filing a reorganization plan until May 29, the last such extension allowed under law. There is then a 60-day waiting period for creditors to object to the plan before Lane can sign off on American's emergence from bankruptcy protection.
The merger also needs approval from Department of Justice antitrust regulators and US Airways shareholders. It is expected to close by autumn.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- W.V. entrepreneurs offer hope as coal fades as economic engine
- Demand for surveillance systems boosts sales for Vector Security
- Shell closing Franklin Park office next year
- Mall stores required to open for Thanksgiving
- Yahoo investors losing patience with ‘star’ CEO Marissa Mayer
- Fed slashes its emergency power options in crisis