A big hurdle was cleared Wednesday as Fort Worth-based American Airlines looks to create the world's largest airline with US Airways.

U.S. Bankruptcy Judge Sean Lane in New York approved the merger between the two carriers, but set aside for now a big payday for Tom Horton, CEO of AMR Corp., American's parent company.

The merger, once viewed dimly by Horton and his management team, won the glowing approval of the bankruptcy judge who called it a "terrific result."

The two airlines issued a brief joint statement following the judge's ruling:

"Judge Lane s approval of the merger agreement today allows us to continue progressing forward with our planned merger and we are gratified to know that he considers the merger an excellent result for stakeholders. The Court approved the merger agreement but deferred ruling on Mr. Horton s compensation arrangement.

US Airways Chairman and CEO Doug Parker told CNBC the combination should also be a good result for passengers, with more flights, destinations and no fare hike from the merger.

"We're putting these two airlines together and not reducing supply whatsoever," he said. "What's going to happen to prices? I don't know. But what I know is, this merger is not going to have impact on what happens to prices."

But on another money matter, the judge ruled against Horton at least for now.

The airlines recommended Horton get a $20 million severance payment when he leaves after American emerges from bankruptcy. But Judge Lane said the payment could be decided later, when American submits its final reorganization plan... or by the new carrier's board of directors.

For passengers, Parker promises better service.

"It's going to result in improvements," he said. "We have tremendous support for our merger from the employees for both airlines because we are going to take some of these synergies and use that to both create a stronger airline, but also compensate people better."

If the Justice Department's antitrust division approves of the merger, the new American hopes to be out of bankruptcy by September.


Read or Share this story: