NEW YORK –– After a day of arguments, a U.S. Bankruptcy Court judge closed the record on whether AMR can emerge from bankruptcy, saying he needs two weeks to determine whether to confirm American Airlines' plan of exit, considering the federal suit attempting to block a merger with US Airways.
Judge Sean H. Lane still heard arguments and objections, but recessed the hearing just before 4 p.m. Central time. He has called both parties back for another hearing on Aug. 29 when he will decide whether to approve American's bankruptcy and merger while the justice deptartment's lawsuit is still pending.
Also undecided Thursday was whether AMR CEO Tom Horton's $20 million severance will be paid.
Judge Lane said he had "lingering doubts" on whether to approve American Airlines' exit from bankruptcy, as earlier this week the Department of Justice sued to stop a merger between the Fort Worth-based airline and US Aireways.
American Airlines spokesman Mike Trevino issued the below statement after the judge's non-ruling:
“While we await the Court’s decision on our Plan of Reorganization, we will continue to proceed with the legal process to challenge the DOJ complaint in federal court. As we continue to build an airline that is profitable and successful, we will continue planning for our proposed merger with US Airways with teams of talented people committed to the long-term success of the new American."
Earlier in the day, Judge Lane told one attorney: "I may rule today, maybe two weeks from now. I’m going to reserve judgment on that."
“The question is whether proceeding with this plan is proper or appropriate considering the circumstances,” Judge Lane told a standing room only court Thursday morning.
Two days ago, The DOJ and six states sued to block American’s merger with US Airways, saying it would reduce competition and raise fares for passengers. If approved, the merger would make the new airline the largest in the world.
“Obviously, we are disappointed with the complaint filed by the Department of Justice. But that lawsuit is not an impediment to this plan going forward,” said Stephen Koratkin, attorney for American Airlines.
Judge Lane said he considered adjourning this morning’s hearing but opted against it worrying that “might have created uncertainty or confusion.”
American Airlines also asked to proceed with Thursday’s hearing despite the federal lawsuit.
So the judge asked all attorneys involved to submit briefs “on the impact of the lawsuit” and whether he should go forward.
But instead of waiting on those, Judge Lane began to hear arguments on whether he should approve American’s exit from bankruptcy and merger with US Airways.
American Airlines said it vigorously denies the Justice Department’s allegation and airline attorneys said yesterday that they are preparing to argue that in trial which it hopes happens by the end of the year.
Three overflow courtrooms were set up because of the intense interest in the hearing.
Reporter Jason Whitely is live Tweeting developments from the courtroom. Follow him on Twitter: @jasonwhitely