U.S. bankruptcy judge Sean Lane approved AMR Corp.'s restructuring plan to merge American Airlines with US Airways pending government approval of the deal, he said at a court hearing on Thursday.
Media reports from inside the New York court room said Lane also ruled that AMR chief executive Tom Horton's $20 million compensation package should not be part of the restructuring plan and will issue a written ruling about it in the next few days.
Lane overruled an objection made by the U.S. bankruptcy trustee who said Horton's cash and stock payment did not conform with restrictions placed on executive compensation arrangements in the U.S. Bankruptcy Code.
In a statement issued on Thursday, American said Horton will recommend to the board of directors to remove his compensation agreement from the plan. The board is scheduled to meet on Wednesday.
"Mr. Horton has consistently indicated his strong support for the Plan and the Merger," the statement said. "He also feels that any delay or uncertainty places a further burden on those who have worked so hard to achieve one of the most successful restructurings in aviation history."
Although Lane's approval of the restructuring plan would usually allow AMR to emerge from bankruptcy protection, it is contingent on the airlines resolving a pending anti-trust lawsuit filed by the U.S. Justice Department. A federal judge in Washington D.C. has set a trial date of November 25 to hear the anti-trust suit.