Judge Issued Decision That Would Allow American Airlines To Merge With US Airways But Said No To $20 Million In Severance For American Parent Company Head

Sean H. Lane issued his decision that would allow American Airlines to merge with US Airways to become the largest airline in the world, but the Federal Bankruptcy Court judge didn’t give the green light to a $20 million severance package for Thomas W. Horton, chief executive of American’s parent company, the AMR Corporation, several news outlets have reported. The federal bankruptcy trustee for AMR had objected to the severance package, the New York Times said. Lane didn’t object to the proposed severance amount, yet he agreed that its timing could violate bankruptcy law prohibitions, the newpaper said.

Under the deal, US Airways chief executive Doug Parker would become the new airline’s top executive, and Horton would become chairman of the board, the Los Angeles Times reported. Lane suggested the severance should not be considered in the merger but instead discussed at a future time, perhaps as part of AMR's bankruptcy reorganization plan, according to the Associated Press.

The merger between American, which filed for Chapter 11 bankruptcy in November 2011, and US Airways still needs approval from Justice Department antitrust regulators and US Airways shareholders, the N.Y. Times said.

The new American Airlines will have 6,700 daily flights, and carry slightly more passengers than United, which is currently the number-one airline, the Times reported.