AMR Calls Delay of Bankruptcy Plan Approval ‘Destabilizing’

AMR Corp. (AAMRQ) told a bankruptcy judge that its reorganization plan should be approved even though the U.S. Justice Department has sued to block a merger with US Airways Group Inc. that underpins the plan.

Waiting to resolve the government’s antitrust case would be “destabilizing,” AMR, the parent company of American Airlines, said today in a court filing in Manhattan.

The U.S. said today that it took no position on whether the bankruptcy court should approve the plan before the antitrust question is resolved. It has asked a Washington court to set a February trial for the antitrust case.

Failure to confirm the plan when all other conditions have been met under bankruptcy law would “add an unwarranted element of uncertainty to the administration of the Chapter 11 cases and would introduce a destabilizing factor,” Fort Worth, Texas-based AMR said. The expectations of customers, vendors, suppliers, employees and business partners all need to be met, the airline company said.

AMR and US Airways (LCC) have said they want the antitrust case tried in November. They and the Justice Department have asked U.S. District Judge Colleen Kollar-Kotelly in Washington for a hearing to set a timetable for the trial. A February proceeding would “cause serious harm and cannot be justified,” the airlines said in a joint filing.

Biggest Airline

The U.S. lawsuit is an obstacle to American Airlines’ plan to exit bankruptcy through a merger that would create the world’s biggest airline. The government’s challenge, which surprised industry executives and analysts, marks a break with the past policy. The Justice Department allowed six airlines to merge during the past five years as they sought to cut costs and end losses.

The antitrust case is U.S. v. US Airways Group Inc., 13-cv-01236, U.S. District Court, District of Columbia (Washington). The bankruptcy case is In re AMR Corp., 11-bk-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

To contact the reporters on this story: Tiffany Kary in New York at tkary@bloomberg.net; Sara Forden in Washington at sforden@bloomberg.net

To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net; Andrew Dunn at adunn8@bloomberg.net

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