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Court Approves American’s Exit from Bankruptcy, Clears Way for AA/US Airways Merger

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Court Approves American’s Exit from Bankruptcy, Clears Way for AA/US Airways Merger

Court Approves American’s Exit from Bankruptcy, Clears Way for AA/US Airways Merger
November 27
10:18 2013

MIAMI — Federal bankruptcy Judge Sean Lane today gave American Airlines approval to exit bankruptcy “without delay” on Tuesday. The decision, issued from the bench, sets up the stage for a quick exit from bankruptcy after nearly two years and subsequently paves the way for a planned merger with US Airways.

Judge Lane ruled that the Department of Justice settlement does not materially upset the reorganization of American Airlines, thus allowing for an exit from bankruptcy. “[T]he Court finds that the settlement easily satisfies the requirements for approval under Rule 9019, as well as the immediate consummation of the merger. The balance between the litigation’s possibility of success and the settlement’s future benefits weighs heavily in favor of approving the settlement.”

The court also declined to issue a temporary restraining order requested by the attorneys representing a class action lawsuit seeking to block the merger until a full trial is held. The attorney representing the class argued that the merger would lead to increased prices and less capacity, but Lane ruled the plaintiffs failed to show personal, irreparable harm due to the merger.

Lane did leave the door open for plaintiffs to seek further divestitures down the road, however, if they were able to eventually prove damages had been done.

American Airlines moved quickly to cement the action, stating in a press release that Monday’s “rulings by the Court are another important step in our path toward emerging from restructuring and closing our planned merger with US Airways. With the court’s rulings today, we now intend to close the merger on December 9.”

The merger had initially been announced in February of 2013, but just before closing, the Department of Justice along with several states sued to block the merger. The November 12 settlement of the DOJ lawsuit saw the forfeiting of slots mostly at Ronald Reagan Washington National Airport in Washington, D.C. A handful of slots and gates were also given up at airports around the country, but are considered to be minor compared to the forfeiture at DCA.

The merger will create the world’s largest airline. Once the merger is closed next month, AMR Corporation (parent company of American Airlines) will be renamed American Airlines Group Inc.

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