A judge on Wednesday approved a settlement resolving U.S. regulators' opposition to a merger between AMR Corp and US Airways Group Inc, allowing AMR, the bankrupt parent of American Airlines, to soon close on a tie-up that will create the world's largest carrier.
Judge Sean Lane, at a hearing in U.S. Bankruptcy Court in Manhattan, called the settlement "fair and equitable" and said it was in the "best interest" of AMR's creditors in bankruptcy.
AMR said in a statement it will seek to close on the deal by Dec. 9. However, a group of consumers that opposes the merger could delay matters by appealing Lane's approval.
Let our news meet your inbox. The news and stories that matters, delivered weekday mornings.
The U.S. Department of Justice had challenged the merger, which was to serve as the basis for AMR's plan to exit Chapter 11, where it has been for about two years, and pay back stakeholders. The DOJ's antitrust watchdog said the plan could impede competition and drive up ticket prices.
The airlines earlier this month agreed to divest takeoff and landing rights and gates at Washington Reagan National, New York LaGuardia and several other airports. The deal needed approval from Lane, who oversees AMR's bankruptcy.
The consumers who oppose the deal make up a class of plaintiffs that have sued the airlines in a separate lawsuit, alleging the transaction could lead to higher prices, more crowded planes and more expensive in-flight amenities. The group sought a temporary restraining order blocking the plan from going into effect, but Lane rejected it, saying the group failed to offer any evidence of "irreparable harm" if the deal went through.
The group, represented by California lawyer Joseph Alioto, could appeal Lane's decision. That could add some uncertainty to the timetable for closing the deal, though any appeal would likely be expedited.
AMR declared bankruptcy in November 2011, weighed down by hefty labor liabilities and other debt. It was the last of the major U.S. carriers to go through a restructuring.
The merger with US Airways is expected to afford some recovery for shareholders of pre-bankruptcy AMR, a rarity in Chapter 11 for public companies. AMR's bankruptcy lawyer, Stephen Karotkin, said earlier this week that stakeholders are on track to realize more than $13 billion in value.
In its statement, AMR said the merged entity will be called American Airlines Group Inc, with common stock trading on the NASDAQ Global Select Market under the symbol "AAL."
The bankruptcy is In re AMR Corp, U.S. Bankruptcy Court, Southern District of New York, No. 11-15463.