American Airlines given approval to exit bankruptcy

A federal judge in the US has approved a bankruptcy plan put forward by American Airlines, contingent on the carrier getting approval for its merger with US Airways.

The Manhattan judge backed the proposal which would see the company exit restructuring proceedings almost two years after it originally filed for bankruptcy.

However, the merger, which has been approved by both parties and unions, has been stalled by the US department of justice which believes the deal would negatively impact competition and passengers rights.

There is a trial scheduled for November which will determine whether the merger is to go ahead or not.

The carriers have put forward the case that after a string of high profile mergers – most notably Delta Air lines and United Airlines – they need to combine their networks in order to better compete with the consolidating market.

In a statement, Tom Horton, American Airlines chairman, president & CEO said: “We strongly believe in the significant benefits the merger of American Airlines and US Airways will deliver to consumers, communities and employees.

“The people of American Airlines have worked extremely hard over the past two years to lead our company through a remarkable and successful restructuring and turnaround. After all of their contributions, we are ready to move forward with this merger. We look forward to beginning this trial in November so we can complete our journey toward building the new American and deliver on the promise of this merger.”

Doug Parker chairman & CEO of US Airways added: “We are eager to show that the Department Of Justice’s action would deny millions of customers access to a more competitive airline that will offer customers what they want, delivering significant benefits to consumers, communities and employees.

“The new American Airlines is predicated on growth. This merger is the foundation of American’s plan to exit bankruptcy and is the cornerstone of American’s and US Airways’ plan to form a more competitive and cost-effective airline to take on the country’s largest air carriers – Delta, United Airlines, and Southwest – and a number of fast-growing low-cost carriers, including Virgin America, JetBlue, Spirit, and Allegiant. We are committed to resolving this litigation and, if necessary, will pursue all legal options in order to achieve this merger.”