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A group of 19 attorneys general, led by Texas, has joined a U.S. Justice Department probe of a planned merger of American Airlines Inc. and US Airways Group Inc., Reuters reported yesterday. Some of the states involved worry that they will lose a hub because of the planned transaction, which would create the world's largest airline, while others are concerned about service cutbacks to smaller cities. US Airways announced on February 14 that it planned to merge with American, which is emerging from bankruptcy, in an $11 billion stock deal. The companies hope to wrap up the merger by the end of September. The state attorneys general are working with the Justice and Transportation Departments, both of which must approve the deal. Texas is leading the state effort, with Arkansas, Arizona, California, Washington, D.C., Florida, Iowa, Illinois, Minnesota, Mississippi, Nebraska, New York, Oklahoma, Pennsylvania, South Carolina, Tennessee, Virginia, Wisconsin and West Virginia also being involved in the investigation.

The parent of American Airlines won approval to renew its leases at airports in San Francisco and Nashville under agreements that will save it millions of dollars over the next several years, Dow Jones Daily Bankruptcy Review reported today. Bankruptcy Judge Sean H. Lane on Thursday signed off on AMR Corp.'s deals with the airports.

Two U.S. lawmakers with antitrust oversight have urged the Obama administration to carefully review a planned merger of American Airlines and US Airways Group to ensure that it will not lead to higher prices for air travelers, Reuters reported yesterday. US Airways announced on Feb. 14 that it planned to buy American Airlines parent AMR Corp., which is restructuring in bankruptcy court. The airlines are looking to complete the deal by the end of September. Senator Amy Klobuchar (D-Minn.), who chairs the Senate Judiciary Committee's antitrust subcommittee, and Mike Lee (R-Utah), the top Republican on the panel, said that the deal would mean the top four U.S. airlines would control nearly 90 percent of the U.S. market. The pair acknowledged in a letter yesterday that there could be efficiencies associated with the deal, but also noted concern that flight costs could go up or customer service could deteriorate.

American Airlines' bankrupt parent received court permission yesterday to send its restructuring plan to creditors for a vote, bringing its planned $11 billion merger with US Airways Group a step closer to reality, Reuters reported yesterday. Bankruptcy Judge Sean Lane yesterday approved an outline of AMR Corp's plan at a court hearing. The basis of the plan is a merger with US Airways, which was agreed to in February after hard-fought negotiations and initial resistance from AMR. Current AMR shareholders will get a 3.5 percent stake in the new airline, a rare example of a bankruptcy in which shareholders do not walk away empty-handed. The company has projected the value of the stake approaching the $400 million range. The key objection to the plan outline had come from the U.S. Trustee Program, the Department of Justice's bankruptcy watchdog, over a roughly $20 million severance package for outgoing AMR Chief Executive Tom Horton. U.S. TrusteeTracy Hope Davis last month argued that the document did not contain enough detail on the negotiations surrounding the severance, and that bankruptcy law bars such payments except when they are generally applicable to all employees. Judge Lane approved the plan outline over the objection, saying that Davis failed to show the plan was "patently unconfirmable." Still, AMR agreed to update the document with more information about the Horton deal.

American Airlines' parent lost $105 million in April, but the CEO says AMR Corp. is on track for a strong profit in the April-to-June quarter, the Associated Press reported yesterday. AMR narrowed its loss for April from last year's $142 million by cutting labor costs by $106 million, or 18 percent, to $478 million. The company has eliminated several thousand jobs since filing for bankruptcy protection in November 2011. AMR also spent $26 million less on fuel, or $722 million. The labor and fuel cuts helped AMR reduce operating expenses by 4 percent, to $1.98 billion.
Revenue, however, slipped more than 2 percent, to $1.99 billion.

A plan by American Airlines' parent to exit bankruptcy and merge with US Airways Group is coming under fire from the U.S. Department of Justice over nearly $20 million in severance pay earmarked for outgoing CEO Tom Horton, Reuters reported on Friday. U.S. Trustee Tracy Hope Davis said in court papers on Friday that the severance deal for AMR Corp's chief executive violates bankruptcy law. The initial merger agreement called for $19.9 million in severance payments for Horton, but when Judge Sean Lane approved the merger at a hearing in March, he refused to green-light the severance package, saying that it was a matter that should be left for AMR's chapter 11 exit plan. Davis at the time had opposed the severance on grounds similar to those she cited on Friday.

Rulemakers around the world yesterday issued a new proposal on accounting for leases that would require many companies to report vastly larger amounts of assets and liabilities than they do now, the New York Times reported yesterday. Under current rules, companies are generally able to classify virtually all leases as operating leases and keep them off their balance sheets, something that regulators and accounting critics have long criticized. Some airlines, for example, lease all their airplanes and show no airplane assets on their balance sheets and no liabilities for the money they are committed to pay for those planes in the future. Under the proposal, issued jointly by the International Accounting Standards Board, which sets rules for many countries around the globe, and by the Financial Accounting Standards Board, which writes the U.S. rules, an airline entering into a lease for a plane would show an asset of the right to use the plane and an equal liability based on the current value of the lease payments it has promised to make. That accounting would be similar to what it would show had it borrowed money to buy the plane.

AMR Corp. struck a deal with unsecured creditors owed more than $1.6 billion that it says will speed both its exit from bankruptcy and its merger with US Airways Group Inc., Dow Jones Daily Bankruptcy Review reported today. The American Airlines parent on Tuesday filed court papers seeking a judge's blessing for an agreement that lends the support of "a very significant portion" of the company's unsecured creditors to its debt-repayment plan.

Bankruptcy Judge Sean Lane on Friday officially approved American Airlines’ merger agreement with US Airways, the Fort Worth (Texas) Star-Telegram reported on Saturday. And in keeping with his decision at a March 27 hearing, the written order did not approve a $20 million severance package proposed for American Chief Executive Tom Horton—a plan that U.S. Trustee Tracy Hope Davis had objected to. The two carriers had originally agreed to pay Horton $9.9375 million in cash and $9.9375 million in shares of the new company’s common stock once the merger closed. Davis argued that the payment did not conform to restrictions placed on executive compensation by the Bankruptcy Code.

AMR Corp., the airline merging with US Airways Group Inc., won a judge’s approval to borrow as much as $3.25 billion as it moves toward exiting bankruptcy, Bloomberg News reported. AMR, the parent of American Airlines, sought the financing to take advantage of low interest rates, fund costs tied to its reorganization and repay debt. The loans, approved yesterday at a court hearing by Bankruptcy Judge Sean Lane will be American’s “primary source” of financing for emerging from bankruptcy, said Richard Hahn, an attorney for the Fort Worth, Texas-based company. American filed for bankruptcy in 2011 and is planning to merge with US Airways to create the world’s largest airline. American is set to complete its bankruptcy reorganization through the merger with Tempe, Arizona-based US Airways later this year.