DALLAS — After a brief hearing in a New York federal courtroom Wednesday morning, American Airlines received permission to exit bankruptcy and merge with US Airways without further delay.
U.S. Bankruptcy Judge Sean H. Lane said American didn't need to ask its creditors again for approval to exit bankruptcy and said the court will also grant permission for the merger to be consummated without delay.
The judge also denied a request for a temporary restraining order from Joseph Alioto, a San Francisco attorney who claims he represents 40 plaintiffs who believe the merger will increase fares and reduce competition.
Judge Lane said he would issue a detailed written order around 11 a.m.
American Airlines immediately filed paperwork with the court to make December 9 the effective date for the merger. On that day, the new airline will be known as the American Airlines Group. The new ticker symbol will be AAL and AMR will become history.
“Today’s rulings by the Court are another important step in our path toward emerging from restructuring and closing our planned merger with US Airways," said American spokesman Mike Trevino in a prepared statement. "The new American will compete on a global scale with a network that benefits our people, our customers and the communities we serve. With the court’s rulings today, we now intend to close the merger on December 9.”
With an estimated 952 aircraft and operating more than 6,500 daily flights to 336 destinations in 56 countries, the new American will become the largest airline in the world.
When the merger closes next month, pilots will receive half of their 13 percent equity stake in the company in the form of stock. It equates to about $120,000 per pilot, according to the Allied Pilots Association. The union representing American’s pilots said the equity stake will be partial compensation for the loss of the pilots’ pensions. On average, flight attendants will receive $15,000 for their 3 percent equity stake.
American Airlines filed for bankruptcy protection almost two years ago on Nov. 29, 2011 after four consecutive years of annual losses. American had $24 billion in assets and $29 billion in debt.
The airline used bankruptcy to reduce labor costs by 17 percent and freeze pensions, erasing $2 billion from its bottom line and increasing revenue by a billion dollars annually.
American eliminated 8,600 positions, including 2,200 flight attendants, 3, 800 TWU-represented employees, 1,200 management and support staff and 1,400 agents, reservation representatives and planners.
The new American Airlines will remain based in Fort Worth.