Air- Judge delays decision on AA settlement – Tulsa World: American Airlines

Posted: November 27, 2013 in Uncategorized

Nov. 26, 2013

American Airlines parent AMR Corp. will have to wait a little longer to learn whether a bankruptcy judge will approve its settlement with the U.S. Justice Department of a lawsuit over the carrier\’s proposed merger with US Airways Group Inc.

U.S. Bankruptcy Judge Sean Lane declined to rule on the settlement from the bench after a hearing Monday in New York. After hours of argument over a group\’s request to block the regulatory accord, the judge said he would have a decision by Wednesday at the latest.

\”This hearing represents the culmination of perhaps the most successful Chapter 11 case for an airline in recent history,\” Stephen Karotkin, a lawyer for AMR, told the judge.

Under the Nov. 12 accord, the Justice Department agreed to drop its antitrust challenge if the carriers gave up some airport slots.

American Airlines will form the world\’s biggest airline if the merger with Tempe, Ariz.-based US Airways is completed. The federal district judge presiding over the antitrust case in Washington must also approve the proposed settlement after accepting comments from the public through Feb. 7.

The deal with US Airways is the linchpin of Fort Worth, Texas-based American\’s bid to emerge from bankruptcy after almost two years and repay creditors. Lane approved American\’s reorganization plan in September while barring it from taking effect until the underlying merger won regulatory clearance.

The announced settlement earlier this month was a relief to American Airlines and US Airways employees, union officials and industry insiders. More than 6,000 of those employees are in Tulsa at American Airlines\’ primary maintenance and overhaul facility.

To resolve regulators\’ concerns that the deal would give the merged airline too much clout at Washington\’s Ronald Reagan National Airport and boost prices, American and US Airways agreed to divest 52 pairs of takeoff and landing slots there. The combined carrier would also give up 34 slots at New York\’s LaGuardia Airport and make smaller concessions at five other airports.

The Justice Department filed an antitrust lawsuit to block the merger of American and US Airways in August, arguing it would raise prices and harm consumers. American could emerge from bankruptcy and compete on its own without the merger, the U.S. said.

American Airlines and US Airways said the deal would be good for passengers, giving them more choices and generating more than $500 million a year in benefits.

AMR\’s total value for its stakeholders under the reorganization plan is about $13.1 billion based on current trading, representing an increase of $2.7 billion since Aug. 7, when a valuation was last completed, Karotkin told Lane Monday. He called the value created for creditors a \”remarkable achievement.\”

After the merger, US Airways Chief Executive Officer Doug Parker would hold that title at the combined airline, while AMR CEO Tom Horton would serve as chairman until the first annual meeting of the merged carrier.

In September, Lane challenged a $20 million severance payment under the turnaround plan for Horton, prompting Karotkin to say the payout would be dropped to win approval.

The agreement gives 28 percent of the stock of the combined company to US Airways shareholders, with the remaining 72 percent going AMR creditors, unions, certain employees and shareholders.

via Judge delays decision on AA settlement – Tulsa World: American Airlines.

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