American to file reorganisation plan in April

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American Airlines will file its reorganisation plan with the bankruptcy court in April, says chief executive Tom Horton.

The Fort Worth-based carrier has until 29 May to file its plan with the court, under a motion approved by judge Sean Lane at a hearing in New York on 27 March. There is a 60-day comment period following the filing before the judge can rule on the plan.

Horton says that American and US Airways' proposed $11 billion merger is on track to close at the end of the third quarter, speaking at a Wings Club luncheon in New York today. The airline plans to close the merger on the same day that it exits bankruptcy protection, he adds.

Regulatory approval is the one unknown in the merger process, says Horton. American and US Airways anticipate approval in August or September but that date is out of the airlines' control, he notes.

Lane approved the merger without a planned $19.9 million compensation package for Horton at the hearing on 27 March.

"This merger is a terrific result," he said in his decision, adding that the proposed compensation to Horton "casts the whole thing in unfavourable light by implication".

"It's really a matter for the board of American and the owners of the new company," says Horton on the decision. He does not expect it to impact the timeline of the deal.

He shed some light on American's evaluation of merger alternatives at the Wings Club. He says that he always considered a merger part of American's bankruptcy restructuring but that it needed to sort out its cost and labour issues first before it could consider a deal.

This differs from Horton's statements prior to announcing that it would consider merger options in May 2012. Prior to that, he said the best way forward for American was as a standalone carrier.

Horton and US Airways chief executive Doug Parker first spoke about a possible merger in the third quarter of 2011 after the American's order for 460 Airbus and Boeing narrowbodies and before it filed for chapter 11, says Horton. They spoke again on when the airline filed for bankruptcy on 29 November.

Even when US Airways began "opportunistically" talking about a merger publicly in early 2012 it was too soon for American to consider such a combination, he says. The timeline that eventually occurred, with a strategic evaluation of all the possible alternatives and an initial decision to merge with US Airways in August 2012, fit with American's restructuring timeline, he concludes.