September 13, 2013 in Business

American Airlines’ bankruptcy plan approved

Judge says ruling relies on feds agreeing to US Airways merger
David Koenig Associated Press
 

DALLAS – A federal judge has approved American Airlines’ plan to emerge from bankruptcy protection and merge with US Airways, although the airlines must still resolve a lawsuit filed by the federal government seeking to block the merger.

A trial over that lawsuit is scheduled for November.

Thursday’s ruling by federal bankruptcy Judge Sean Lane in New York could restore a sense of momentum for the merger.

“The judge’s ruling today shows that American is heading in the right direction,” said Mike Trevino, a spokesman for American’s parent company, AMR Corp. He called it a milestone in AMR’s turnaround since filing for bankruptcy protection in 2011.

The airlines had originally hoped to close the merger this month and create the world’s biggest carrier. They’re now shooting for the end of the year, if they can either settle the antitrust lawsuit with the U.S. Justice Department or win the case in court.

Last month, Lane openly wondered whether he could approve AMR’s reorganization plan before the merger won regulatory approval. On Thursday, he said he could because “there can be no dispute that the plan is feasible if the merger is allowed to proceed.” The proof, he said, is that the merger is supported by AMR’s unsecured creditors, shareholders and bondholders.

Shares of AMR, based in Fort Worth, Texas, rose 18 cents, or 5.1 percent, to $3.69 in over-the-counter trading Thursday afternoon. US Airways Group Inc., based in Tempe, Ariz., saw its shares slip 4 cents to $17.68.

AMR lawyers had argued against delaying approval of the bankruptcy plan, saying that would put ongoing support for the merger at risk.

Lane said that if the airlines lose the antitrust case, AMR will have to write a new restructuring plan that doesn’t include the merger. If the airlines settle with the Justice Department, Lane would review the terms of the settlement.

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