A bankruptcy judge on Wednesday approved the antitrust
settlement between the Justice Department and merging airlines AMR
Corp. and US Airways Group Inc., clearing the last hurdle to a deal
that will create the world's largest airline.
Judge Sean H. Lane of U.S. Bankruptcy Court in Manhattan signed
off on the deal two days after the airlines made the case in court
that the settlement didn't materially change the merger plan he
signed off on earlier this year. The airlines hope to close the
deal next month.
"Consistent with all these rulings, the court will grant that
the merger be consummated without delay," Judge Lane said from the
bench Wednesday. The settlement with the Justice Department "easily
satisfies" the requirements for approval, he said.
Under current market prices, the merger gives stakeholders more
than $13.1 billion in value, an AMR lawyer said at the Monday
hearing on the settlement.
The judge overruled objections lodged by a lawyer representing
airline customers, who spent more than an hour Monday arguing that
the merger would hurt airline competition and customers. The judge
also shot down an attempt by the lawyer, Joseph M. Alioto, to get a
restraining order to block the merger.
Judge Lane Wednesday said Mr. Alioto presented insufficient
evidence and "utterly failed to establish" that the merger would
cause airline customers irreparable harm.
Although Judge Lane signed off on AMR's plan to exit bankruptcy
through the merger in September, it was held up by the Justice
Department's antitrust lawsuit, which was filed in August.
The Justice Department had argued that the deal would stifle
competition and hurt customers, and the two sides prepared for a
trial that would have begun Monday. But the airlines reached a
settlement with the government earlier this month, agreeing to give
up space at major airports in the U.S.
The carriers also pledged to retain the big hubs that underlie
their combined network and to continue service to certain smaller
cities.
AMR's merger-based Chapter 11 plan will pay bondholders in full
and give the company's existing shareholders at least 3.5% of the
combined airline, a rare outcome in Chapter 11 cases.
In all, the proposal would give 72% of the combined airline to
AMR shareholders, unsecured creditors, labor unions and some
employees. The rest would go to US Air's shareholders.
AMR filed for bankruptcy protection in November 2011, citing the
need to cut operational and labor costs. The company negotiated
deep concessions from its main labor unions after a lengthy trial,
cutting about $1 billion in annual labor costs.
AMR initially planned to exit bankruptcy as an independent
airline, but the company eventually succumbed to the advances of
suitor US Airways.
The combined company will be called American Airlines Group
Inc.
(Dow Jones Daily Bankruptcy Review covers news about distressed
companies and those under bankruptcy protection. Go to
http://dbr.dowjones.com)
Joseph Checkler contributed to this article.
Write to Stephanie Gleason at stephanie.gleason@wsj.com.
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