It was a foregone conclusion that the merger between America Airlines and US Airways would go through the federal bankruptcy court un-opposed, and that assumption become a reality when a federal bankruptcy judge signed off Wednesday on the $11 billion merger.
The approval given by Judge Sean H. Lane basically clears the way for the two carriers to form the world's biggest airline, "with 6,700 daily flights and annual revenue of roughly $40 billion," according to USA Today.
"The merger is an excellent result. I don't think anybody disputes that," Lane said during a court hearing. American has been operating under bankruptcy protection since November 2011," reported USA Today.
This merger, which was announced back on Feb. 14, still seeks and requires the go-ahead nod from the Department of Justice and US Airways shareholders, but it is expected to close, without failure by the fall.
However, though the merger itself was approved, the payment promised to outgoing AA CEO Tom Horton wasn't.
Horton agreed to step down as CEO and leave the company within a year of the merger's closing, but the U.S. trustee objected to Horton's severance, saying it is in excess of limits set under the bankruptcy code.
Judge Lane decision not to approval the payoff will be explained at a later time, via a written statement, but he did say, "approving it [the agreed payoff to Horton] today is just not appropriate," reported USA Today.
The payoff, if approved would have been a good parting gift for the man who has nearly spent his entire professional career at American, becoming CEO when the company filed for bankruptcy on Nov. 29, 2011, but once the merger is 100 percent completed, his services will no longer be needed as current US CEO Doug Parker will run the combined airline.
Judge Lane wanted to make clear that he didn't object the severance, but agreed with the trustee that the timing of it seemed to violate prohibitions in the bankruptcy law.
"I am bound by the way Congress drafted the statute," Lane said, adding that he was worried about setting a bad precedent that lawyers in future cases will try to capitalize upon," stated USA Today.
Adding, "It's not hard to imagine [because] there are many, many smart lawyers out there."
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