Judge indicates support for American-US Air deal

NEW YORK – A federal bankruptcy judge signaled his support for the $11 billion merger of American Airlines and US Airways.

But Judge Sean H. Lane deferred giving his official blessing until he could further consider the timing of a severance package for outgoing American CEO Tom Horton.

“The merger is an excellent result. I don’t think anybody disputes that,” Lane said Wednesday during a court hearing. American has been in bankruptcy protection since November 2011.

If Lane ultimately signs off on the deal, it would still need approval from Department of Justice antitrust regulators and from US Airways shareholders. It is expected to close by the fall.

The companies have proposed paying Horton $20 million in severance. Horton has agreed to step down as CEO and leave the company within a year of the merger’s closing. The U.S. trustee objected to Horton’s severance, saying it is in excess of limits set under the bankruptcy code.

American tried to get Lane to approve the severance as part of a larger motion to approve the merger. The U.S. trustee accused the airline of trying “to misuse their motion to approve the merger to make an end run around” limits included in the bankruptcy code. American denied that.