NEW YORK (AP) – Lawyers for American Airlines pressed a judge Thursday to approve the company’s plan to merge with US Airways and exit bankruptcy protection, but the judge delayed a ruling because of the federal government’s lawsuit against the merger.
This was supposed to be American’s victory lap _ the day that a judge would remove the last hurdle for a merger that would make American the world’s biggest airline.
Instead, it was a sideshow.
The U.S. Justice Department ruined American’s plans _ at least temporarily _ on Tuesday by filing a lawsuit against the merger, which it said would hurt competition and increase prices for consumers by leaving four airlines controlling more than 80 percent of the U.S. air-travel market.
In court Thursday, lawyers for American parent AMR Corp. and its unsecured creditors said the Justice Department’s case shouldn’t stop the bankruptcy judge from approving AMR’s reorganization plan.
But Judge Sean Lane wasn’t so sure. He said he had “lingering doubts” about approving the turnaround plan and even considered postponing Thursday’s hearing. Instead, he went ahead with the hearing but delayed a decision on AMR’s plan until at least Aug. 29.
American and US Airways had hoped to close their merger by late September, but executives for both companies say that is unlikely now. They vowed to fight the Justice Department in court, but that could take months. If the government wins, AMR could be forced to dust off a plan to emerge from bankruptcy as a stand-alone company _ another long process.
The merger was supposed to cap an era of consolidation that has helped the airline industry limit seats, raise prices and return to profitability. Although it would leave one fewer airline, American and US Airways argued that their merger would increase competition by creating a stronger rival to industry leaders United Airlines and Delta Air Lines.
Judge Lane also delayed a ruling on a $20 million severance award for AMR CEO Tom Horton, who would serve briefly as chairman before leaving the new company. The U.S. trustee’s office, which oversees bankruptcy cases for the Justice Department, said the payment violates bankruptcy-law limits designed to prevent executives from getting big rewards not available to regular employees.
Susan Golden, a lawyer for the trustee, said the new company shouldn’t bear the cost of paying Horton for work he did on AMR’s reorganization. “He’s being paid for work already performed,” she said.
But Stephen Karotkin, a lawyer for AMR, said creditors and shareholders approved the merger knowing that it contained Horton’s payment. He said the payment in cash and stock would ensure that Horton sticks around long enough to help smooth the process of combining two airlines.
Koenig reported from Dallas.
(Copyright 2013 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.)
- Celebrating Fourth of July is much cooler in these AZ towns
- Top ten road trip bathrooms in America
- Six things causing a pain in your neck
- 5 things to make your summer move easier
- Three elements of a strong timeshare exit guarantee
- Stretches and exercises for carpal tunnel syndrome
- The best Major League ballparks have their own personality
- Comparing the best regular seasons: The '96 Bulls and '16 Warriors
- 3 Arizona road trips and the vehicles to get you there
- Colon cancer is preventable. Check these signs and symptoms to stay healthy.
- 6 of the biggest skin cancer myths
- Affordable small home makeover ideas
- Locals helping locals: 6 success stories you need to know about
- Sunscreen facts that could save your life
- 6 energy saving hacks for your home
- 5 tips for choosing a company to end your timeshare
- Overlooked water tips to save you money
- 5 of the most adored gentlemen in professional sports today
- The real danger of sitting at your desk
- Most surprising NBA playoff performances of the last 40 years
- 11 classic baseball movies you must see again
- Finally getting rid of fat: 3 methods that actually work
- 4 reasons cancer survivors should focus on food
- 5 spring cleaning spots everyone forgets
- 5 reasons to look forward to watching the D-backs this season
- Common virus attributed to spike in head and neck cancers
- 5 signs it’s time to end your timeshare ownership
- 3 most overlooked ways to keep your home healthy
- 6 ways the air in your home could be making you sick
- CrossFit dangers: 5 common injuries and how to deal with them