Judge declines to approve AMR restructuring

Thu Aug 15, 2013 6:06pm EDT
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By Nick Brown

NEW YORK (Reuters) - A bankruptcy judge on Thursday held off approval of a restructuring plan for American Airlines, citing a U.S. government challenge this week to the airline's proposed merger with US Airways Group Inc LCC.N.

American's parent company, AMR Corp AAMRQ.PK, worked out the $11 billion merger with US Airways as part of a plan to exit bankruptcy, where it has been since 2011.

Judge Sean Lane had been expected to approve the plan at a hearing on Thursday. But, two days before the hearing, the U.S. Justice Department sued to block the merger, saying it would lead to higher fares and hurt consumers.

Instead of approving the plan, Lane gave AMR and its creditors until August 23 to submit briefs on how he should proceed.

Lane said he needed more information about the appropriateness of approving the restructuring plan in light of the antitrust challenge.

AMR and US Airways, which have said they will fight the antitrust lawsuit, and their lawyers argued on Thursday that Lane should still approve the bankruptcy plan.

A lawyer for US Airways, Daniel Wall, said the Justice Department's timing, just two days before the final hearing, was "audacious."

"Don't allow the bankruptcy issues, which are complicated enough on their own, to be held hostage to very late-filed antitrust issues," Wall told the judge.   Continued...

A US Airways plane and an American Airlines plane share a terminal at Ronald Reagan National Airport in Washington April 23, 2012. REUTERS/Kevin Lamarque