American Airlines gets merger nod
Source: Agencies |
March 29, 2013, Friday
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Print Edition
Print Edition
AMERICAN Airlines won bankruptcy court approval to combine with US Airways and form the world's biggest airline.
"The merger is an excellent result. I don't think anybody disputes that," Judge Sean H. Lane said before issuing his decision on Wednesday.
But the judge declined to sign off on a proposed US$20 million severance package for Tom Horton, currently the CEO of American's parent AMR Corp.
The approval is an important milestone for American, which filed for bankruptcy in November 2011 after having long resisted using the bankruptcy process to cut labor and other costs. The merger still needs approval from Department of Justice antitrust regulators and US Airways shareholders. It is expected to close by the autumn.
The combined airline will have 6,700 daily flights and annual revenue of roughly US$40 billion. The new American Airlines will fly slightly more passengers than United, the current No. 1. It will be run by Doug Parker, the CEO of US Airways Group Inc, who began pursuing a merger shortly after American entered bankruptcy protection.
The US trustee, a federal bankruptcy watchdog, had objected to the severance package for Horton. While he didn't question the amount, Lane agreed that the timing of it seemed to violate prohibitions in the bankruptcy law.
"Approving it today is just not appropriate," Lane said. The judge plans to issue a written decision at a later date detailing his reasoning.
Horton has spent nearly his entire career at American, becoming CEO when the company filed for bankruptcy. Horton will cede the CEO position to Parker when the deal closes, and has agreed to leave the company's board within a year of the closing date.
In 2011, Horton was paid a salary of US$618,135. He also got stock awards and options that were valued that year at nearly US$2.7 million, but the company argued those could be nearly worthless after the bankruptcy reorganization. Figures for 2012 aren't yet available.
"The merger is an excellent result. I don't think anybody disputes that," Judge Sean H. Lane said before issuing his decision on Wednesday.
But the judge declined to sign off on a proposed US$20 million severance package for Tom Horton, currently the CEO of American's parent AMR Corp.
The approval is an important milestone for American, which filed for bankruptcy in November 2011 after having long resisted using the bankruptcy process to cut labor and other costs. The merger still needs approval from Department of Justice antitrust regulators and US Airways shareholders. It is expected to close by the autumn.
The combined airline will have 6,700 daily flights and annual revenue of roughly US$40 billion. The new American Airlines will fly slightly more passengers than United, the current No. 1. It will be run by Doug Parker, the CEO of US Airways Group Inc, who began pursuing a merger shortly after American entered bankruptcy protection.
The US trustee, a federal bankruptcy watchdog, had objected to the severance package for Horton. While he didn't question the amount, Lane agreed that the timing of it seemed to violate prohibitions in the bankruptcy law.
"Approving it today is just not appropriate," Lane said. The judge plans to issue a written decision at a later date detailing his reasoning.
Horton has spent nearly his entire career at American, becoming CEO when the company filed for bankruptcy. Horton will cede the CEO position to Parker when the deal closes, and has agreed to leave the company's board within a year of the closing date.
In 2011, Horton was paid a salary of US$618,135. He also got stock awards and options that were valued that year at nearly US$2.7 million, but the company argued those could be nearly worthless after the bankruptcy reorganization. Figures for 2012 aren't yet available.
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