AMR Judge Says Arguments for Plan Approval ‘Persuasive’

AMR Corp.’s arguments in favor of approving its plan to exit bankruptcy through a merger with US Airways Group Inc. are “fairly persuasive,” a judge said as the deal is held up by a U.S. antitrust lawsuit.

“I’d like to reflect on them a little bit more,” U.S. Bankruptcy Judge Sean Lane said today as he deferred a ruling on approval of the plan at a hearing in Manhattan. Lane on Aug. 15 heard AMR’s request to approve the plan with the U.S. lawsuit pending. AMR, the parent company of American Airlines, said last week in a court filing that waiting to resolve the government’s antitrust case would be “destabilizing.”

The two sides are set to go before U.S. District Judge Colleen Kollar-Kotelly in Washington tomorrow to argue over a schedule for the antitrust trial. AMR and US Airways are seeking a November trial date while the government has proposed waiting until March. Such a delay would put the deal that would create the world’s largest airline at risk, the companies said yesterday in a court filing.

AMR, based in Fort Worth, Texas, has been reorganizing in bankruptcy since November 2011. American’s merger with Tempe, Arizona-based US Airways, already approved by Lane, forms the basis of its plan to pay creditors and exit court protection. The U.S. had said it took no position on whether Lane should approve the reorganization plan before the antitrust question is resolved.

U.S. Complaint

The proposed combination would lead to less competition in the industry and higher prices for consumers, the government said in its Aug. 13 complaint. If the U.S. succeeds in blocking the merger, AMR would continue operating in bankruptcy and develop a new reorganization plan.

AMR creditors and shareholders support the current proposal, according to ballot results announced Aug. 1. The merger would provide full recovery to unsecured creditors and new stock for shareholders. The airlines were awaiting regulatory approval and Lane’s signoff before completing the deal.

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

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