American restructuring plan confirmed by bankruptcy court

Washington DC
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A New York bankruptcy court confirmed American Airlines' restructuring plan including its proposed merger with US Airways today.

Judge Sean Lane of the Bankruptcy Court for the Southern District of New York says that he will confirm the plan on the condition that the US Department of Justice (DOJ) approve the deal, however, he adds that a controversial $20 million severance package for American chairman and chief executive Tom Horton should not be included.

Horton will recommend to American's board of directors that the severance package be removed from the restructuring plan at a board meeting on 18 September, says the Fort Worth, Texas-based carrier.

Lane is expected to issue a written ruling within the next few days.

"The judge's ruling today shows that American is heading in the right direction," says American. "We are focused on the antitrust case and will show that our planned merger with US Airways is good for consumers and competition."

The DOJ has challenged the merger, calling it anticompetitive, in US District Court with the trial scheduled to begin on 25 November.

US Airways declines to comment.