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American pushes for reorganisation plan confirmation, DOJ neutral

American Airlines has asked the bankruptcy court to confirm its reorganisation plan, including its proposed merger with US Airways, while the US Department of Justice (DOJ) takes "no position" on the move.

The Fort Worth-based carrier says that not confirming the plan would add an "unwarranted element of uncertainty" to both the airline and its creditors and adds that the plan will be annulled if the DOJ successfully blocks the merger, in a filing with the US Bankruptcy Court for the Southern District of New York today.

"All parties involved are well aware that if a satisfactory resolution of the DOJ action is not obtained, the merger will not be consummated and the plan will be withdrawn," says American in its brief. "As stated, a determination of a plan's feasibility only is relevant or applicable if the plan becomes effective. In the absence of an effective plan, there is nothing to consider for feasibility purposes."

The airline says that if a settlement were reached with DOJ, it would have to be approved by the bankruptcy court.

The reorganisation plan centres on the proposed merger of American with Tempe, Arizona-based US Airways. The deal was challenged by the DOJ on 13 August, prompting bankruptcy court judge Sean Lane to request briefs on the challenge's impact to the bankruptcy, reorganisation plan and confirmation requirements at a hearing on 15 August.

The DOJ has "no position" on the confirmation of American's reorganisation plan but continues to seek a "permanent injunction blocking the transaction in its entirety", it says in a separate filing with the bankruptcy court today.

The agency says that its challenge to the merger two days before the bankruptcy court hearing was at the request of American and US Airways, who asked for its findings before 15 August.

Bill Baer, assistant attorney general in charge of the its antitrust division at the DOJ, met with executives of both airlines to discuss the government's concerns with the deal on 6 August - a week before its challenge - according to the agency's filing.

The DOJ and both American and US Airways are planning to litigate the challenge in the US District Court for the District of Columbia. A joint trial scheduling conference has been scheduled for 30 August.

The airlines have requested a 12 November trial date while the DOJ is seeking a 10 February 2014 date.

The merger agreement between American and US Airways expires on 17 December.

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