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March 27, 2013

Judge approves American-US Airways merger, does not approve American CEO Horton's $20 million severance

U.S. Bankruptcy Judge Sean Lane approved American Airlines and US Airways merger agreement at a court hearing on Wednesday.

Lane also extended American's request for more time to file its reorganization plan. American's parent company, AMR Corp., now has until May 29 to file the plan.

“The merger is an excellent result. I don’t think anybody disputes that,” Lane said during a court hearing, the Associated Press reported.

However, Lane did not approve American CEO Tom Horton's $20 million severance package. The U.S. bankruptcy trustee had objected to the severance that would be paid to Horton when the merger closed, saying it did not conform to bankruptcy law.

Instead, Lane will consider the severance as part of the company's reorganization plan. He will also issue a written decision at a later date on his ruling.

The merger, which was announced on Feb. 14, still needs approval from government regulators and US Airways shareholders. The carriers have said they expect the deal to close in September.

UPDATE: Here is a joint statement issued by American and US Airways. "Judge Lane’s approval of the merger agreement today allows us to continue progressing forward with our planned merger and we are gratified to know that he considers the merger an “excellent result” for stakeholders. The Court approved the merger agreement but deferred ruling on Mr. Horton’s compensation arrangement."

-Andrea Ahles

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Comments

whitey

LETS JUST PRAY AND HOPE THIS JUDGE KEEPS HIS WORD.BUT TIPICAL AS AMERICAN IS THEY WILL TRY TO BUY THIS JUDGE OFF.HORTONS PACKAGE SHOULD INCLUDE HARD LABOR IN PRISON. NOT FEDERAL BUT HARD LABOR PRISON ALONG WITH THE BOARD OF DIRECTORS AND THE REST LIKE ARPEY CARTY AND THE OTHER SENOIR EXCES WHO RAN THIS AIRLINE INTO THE GROUND!

life realist

Horton's $20 million severance should be divided amongst those employee's who took a pay cut, had their pensions frozen and now work more for less.

dbrasco

I'm happy that someone finally stood up to these bullies. They have ruined countless families in an effort to "cut" with thier layoffs of workers who have invested 20-30 years but then turn around and issued a 20 million severance to a guy who was part of an executive team that lost money for 10 consecutive years. I hope the judge doesn't get budge. Feels good to see someone stand up for the little guys. Hopefully that doesn't change. Kudos to Mr. Lane

dbrasco

Cut cost*

Patrick

Although I have been mostly pro-management throughout this entire process, I am happy to see the judge not approve the disgraceful severance that was supposed to go to Horton. That is obscene and I hope they can prevent it from happening. There is no way any individual should get that type of payout for being removed from a company.

Kate

I don't know what would constitute as fair or not, but these are the terms both AA and US negotiated and therefore seems like it would part of a merger package instead of bankruptcy emergence plan. In addition, Tom Horton has led the company through a successful bankruptcy and did stand his ground to get the most value for the shareholders, you know, the ones who actually own the company. I know it is easier to rail against the evil executives, but in this case, Horton has earned at least something for holding out and maximizing AA's value for all.

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