Judge approves American Airlines' bankruptcy plan

A US court Thursday approved the bankruptcy plan of American Airlines's parent AMR, a key part of the proposed American-US Airways merger deal that is facing a government antitrust challenge.

US Bankruptcy Judge Sean Lane approved AMR's plan to emerge from bankruptcy, in spite of the pending Department of Justice lawsuit.

"This is yet another important milestone in completing one of the most successful turnarounds in commercial aviation," said American spokesman Mike Trevino.

"We are focused on the antitrust case and will show that our planned merger with US Airways is good for consumers and competition."

The AMR bankruptcy reorganization, initially filed in November 2011, had been near completion when the Justice Department in August filed suit to block the American-US Airways merger.

At that point, Lane ordered briefs from American and other stakeholders on whether the department's action should affect the reorganization plan.

American argued that a failure by Lane to approve the reorganization plan would have added a "destabilizing factor" to its carefully negotiated agreements with unions and other parties involved in the bankruptcy.

The Justice Department did not take a position on whether the reorganization should be approved.

However, the reorganization plan holds that if American and US Airways fail to win or settle the antitrust litigation, the reorganization plan would need to be reconsidered by the bankruptcy court.

The US antitrust complaint against the airlines is scheduled to be heard November 25 in Washington.

The government has argued the merger will lead to less competition and higher fares.

The airlines have argued that the merger will benefit consumers by creating a competitor to mega airlines United Airlines and Delta Air Lines that will offer more flights and better service.

[Image via Agence France-Presse]