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The Deal: AMR Secures Plan Confirmation at Last

Tickers in this article: AAMRQ LCC
NEW YORK (TheStreet) -- AMR Corp. has passed its final bankruptcy test and now can look ahead to a Nov. 25 antitrust trial with the Department of Justice.

Judge Sean H. Lane of the U.S. Bankruptcy Court for the Southern District of New York in Manhattan on Thursday, Sept. 12, conditionally confirmed the plan, centered on an $11 billion merger of AMR and US Airways Group .

AMR was originally set for an Aug. 15 confirmation hearing before the DOJ filed its suit against the merger on Aug. 13, causing Lane to postpone the hearing to Aug. 29 and then Sept. 12 while determining whether to confirm the plan.

"There can be no dispute that the plan is feasible if the merger is allowed to proceed," Lane said. "The real issue here is whether the pendency of the DOJ lawsuit acts as a separate bar to feasibility, and the court concludes that it does not."

The DOJ was joined in its action Aug. 13 by attorneys general from six states and the District of Columbia. The government plaintiffs asserted the merger, which would form the world's largest airline, would substantially lessen competition for commercial air travel in local markets throughout the U.S. and result in passengers paying higher airfares and fees for ancillary services while receiving less service overall.

Lane noted the DOJ filed a notice on Aug. 23 that said despite the suit, the agency did not object to confirmation.

"The court agrees that the processes can and should proceed concurrently," Lane said. "Is there a benefit to act now? The court concludes that there is."

In a Thursday statement, AMR spokesman Mike Trevino said: "The judge's ruling today shows that American is heading in the right direction. This is yet another important milestone in completing one of the most successful turnarounds in commercial aviation. We are focused on the antitrust case and will show that our planned merger with US Airways is good for consumers and competition."

Lane, meanwhile, rejected a section of the plan that would have given AMR CEO Tom Horton a $19.88 million severance payment, calling it "impermissible under the Bankruptcy Code."