AMR Corp. Chief Executive Officer Tom Horton’s $20 million severance as part of the airline’s planned merger with US Airways Group Inc. drew an objection from the U.S.
The American Airlines parent hasn’t established that the severance complies with bankruptcy law, the U.S. Trustee, which monitors bankruptcy proceedings, said in a court filing yesterday in U.S. Bankruptcy Court in Manhattan.
Fort Worth, Texas-based American, which filed for bankruptcy in 2011, is scheduled to seek court approval later this month for the $11 billion merger with US Airways to create the world’s largest carrier.
US Airways CEO Doug Parker will take over as CEO of the combined company while Horton will serve as chairman. Horton’s $19.88 million severance would be paid half in cash and half in stock.
Andrew Backover, an American Airlines spokesman, said the objection by the U.S. to Horton’s severance and other employee compensation is without merit.
“The relief requested will appropriately motivate a strong management team during the integration process to ensure the value potential of the merger is realized,” Backover said in a statement.
The case is in re AMR Corp., 11-bk-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).