The long-running effort to merge US Airways and the bankrupt parent of American Airlines looks close to success after a bankruptcy court judge threw out a last-minute private effort to block the deal and cleared it to go ahead.
US Airways and AMR Corporation said they expected the two companies to merge on December 9th before markets opened. They anticipate the merged airline to be the US's largest by sales.
Sean Lane, the judge who has handled AMR’s case since it sought bankruptcy protection in November 2011, dismissed an effort by Joseph Alioto, attorney for a private group seeking to block the transaction, to delay closing.
The judge ruled that the merger could go ahead while Mr Alioto's clients pursued their private antitrust claim over the deal. He approved a deal earlier this month between the merging firms and the US Department of Justice that averted the department seeking a block on the deal.
Giving up slots
The companies agreed to give up take-off and landing slots at Washington's Reagan National Airport and New York's LaGuardia Airport and two gates at each of Boston Logan, Chicago O'Hare, Dallas Love Field, Los Angeles International and Miami International airports.
Mike Trevino, a spokesman for American Airlines, said the judge’s rulings were “another important step” on the company’s path towards emerging from bankruptcy and merging with US Airways.
“The new American will compete on a global scale with a network that benefits our people, our customers and the communities we serve,” he said.
Mr Alioto was seeking a temporary restraining order to prevent the deal going ahead while his clients sought depositions from Doug Parker, chief executive of US Airways, and Tom Horton, AMR’s chief executive. Mr Parker will become chief executive of the newly merged company, while Mr Horton will be chairman.
AMR will emerge from bankruptcy through a merger with US Airways announced in February. US Airways shareholders will receive 28 per cent of the shares; AMR’s creditors will receive the remainder. At yesterday’s US Airways share price of $23.89, the new firm will be valued at $16.8 billion.
The two companies have said they plan to start merging their operations in January. The new airline will use the American Airlines name. It will belong to the Oneworld Alliance led by Europe's International Airlines Group. US Airways will leave the Star Alliance, led by Germany's Lufthansa.
Shares in AMR, thinly traded on an over-the-counter exchange, rose 1.25 per cent to $12.12.
– (Copyright The Financial Times Limited)