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March 27, 2013

Judge set to consider American-US Airways merger agreement

U.S. Bankruptcy Judge Sean Lane will consider approving the merger agreement between American Airlines and US Airways at a hearing today in New York.

Lane will also consider a request from American Airlines' parent company, AMR Corp., to extend its exclusivity period for filing a reorganization plan until May 29. Now, AMR has until April 15 to file it.

The hearing is the next step in finalizing a merger between the No. 3 and No. 5 U.S. airlines. Lane could rule from the bench on American's request for the Bankruptcy Court to approve its merger agreement or he could issue a written ruling at a later date.

The unsecured creditors committee, pilots unions at both airlines and an ad hoc bondholder group have expressed support for the merger.

But the U.S. bankruptcy trustee filed an objection this month, arguing that the $19.8 million severance package negotiated for AMR's chief executive, Tom Horton, does not conform to bankruptcy law.

Horton is slated to become chairman of the combined company for a limited time and will receive a severance of cash and stock when the merger closes if Lane approves the agreement.

US Airways shareholders would have to approve the proposed merger. A vote has not been scheduled. Government regulators also need to approve the merger.

If Lane approves AMR's extension and the motion related to the merger, the next step in Bankruptcy Court would be for AMR to file its reorganization plan.

Once that is filed, creditors have 60 days to object before the judge can approve it, allowing the company to exit Chapter 11 bankruptcy protection.

Both airlines have said they expect the merger to close in September.

-Andrea Ahles

Read more here: http://www.star-telegram.com/2013/03/26/4730578/judge-set-to-consider-american.html#storylink=cpy


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