On Wednesday, U.S. Bankruptcy Judge Sean Lane approved the plan of American Airlines parent company: AMR Corp to merge with US Airways.
The merger still needs regulatory approval. American Airlines must also construct a formal restructuring plan that incorporates the merger. If the courts and creditors approve this plan, then the airline can emerge from the bankruptcy status it has held since November, 2011.
American was the last of the major US legacy airlines to go through the Chapter 11 process. They filed for bankruptcy citing untenable labor costs after years of fruitless negotiations with its staff.
It is highly likely that the Creditors will approve a merger as they were the ones who convinced a reluctant American Airlines to accept US Airways’s advances. Although American is now saying its reluctance was part of a strategy to merge.
The judge, however, did not approve a proposed $19.9 million
severance package for American outgoing CEO Tom Horton, who will be replaced by US Airways CEO Doug Parker. The judge did not seem to fill it was his role to approve the payment or whether it was better to have it included in the restructuring plan.
The merger is expected to take place by October.
US & American begin integration