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U.S. Trustee Tracy Hope Davis is arguing against pay boosts for two financial-advisory firms that evaluated American Airlines' parent AMR Corp.'s pursuit of $3.25 billion in new financing, Dow Jones Daily Bankruptcy Review reported today. The financing would help the struggling airline pay off some bond debt and fund its exit from bankruptcy protection after merging with U.S. Airways Groups Inc. Under proposed tweaks to their hiring agreements, financial advisory firms Rothschild Inc. and Moelis & Co. would split another $15 million for their help in evaluating the financing deal—an additional payment that is unwarranted for firms that already have "generous fee arrangements," Davis argued in court papers filed on Thursday.

Pinnacle Airlines’ long-anticipated emergence from chapter 11 bankruptcy reorganization became official yesterday, according to the Minneapolis Star Tribune. The carrier, soon to be based in the Twin Cities, is now a subsidiary of Delta Air Lines. Since its bankruptcy filing 13 months ago, Memphis, Tenn.-based Pinnacle has reshaped its workforce, including pay cuts for workers, and its fleet. Pinnacle is scheduled to move to a new headquarters facility at the southwest corner of Minneapolis-St. Paul International Airport later this month. Pinnacle has 4,900 employees and operates 181 jets flying more than 1,000 daily flights to more than 100 cities in the U.S. and Canada.

Republic Airways Holdings said yesterday that it still plans to shed its Frontier unit by June or July, depending on whether a sales agreement is reached, Reuters reported yesterday. Indianapolis-based Republic, which operates regional carriers Republic Airlines and Chautauqua Airlines, has been looking to divest itself of Frontier since late 2011. It had bought Frontier out of bankruptcy in 2009. The Wall Street Journal reported in early April that two investment firms, Indigo Partners LLC in Phoenix, and Anchorage Capital Group LLC in New York, were competing to buy Frontier. Talks with Republic were at an early stage and could fall apart, the newspaper reported.

Bankruptcy Judge Sean Lane has approved two antitrust settlements between American Airlines Inc., Orbitz Worldwide Inc. and Travelport Ltd., ending a two-year legal battle, the Dallas Morning News reported today. In April, American and Orbitz settled their legal dispute over ticket distribution. In March, American settled claims that Travelport colluded with other reservation systems to stifle competition in providing flight data to travelers and agreed to a new distribution agreement. Both settlements required approval of the bankruptcy court in American and its parent AMR Corp.’s chapter 11 reorganization. Terms of the settlements were not released, and Judge Lane granted AMR's request to seal the settlements and Travelport agreement and redact the confidential information from the Travelport agreement,” according to court documents filed on Thursday.

AMR Corp.'s first-quarter loss narrowed amid fewer reorganization-related charges, but excluding those expenses, merger-related charges and other items, the parent of American Airlines showed a profit, the Wall Street Journal reported today. The first quarter historically is the weakest for the airline industry, due to seasonally lower demand. So AMR CEO Tom Horton said that he was pleased to report an $8 million profit, excluding $349 million of one-time reorganization and restructuring items. On a net basis, AMR narrowed its first-quarter net loss to $341 million from the year-earlier net loss of nearly $1.7 billion, or a loss was $248 million, leaving out about $1.4 billion in restructuring and other charges.

Bankruptcy Judge Robert E. Gerber yesterday cleared regional carrier Pinnacle Airlines Corp. to leave chapter 11 as a unit of Delta Air Lines Inc., a decision that streamlines Pinnacle's operations and costs in an increasingly consolidating airline industry, Dow Jones Newswires reported yesterday. Pinnacle said that it expects to be out of bankruptcy by May 1, and that the only regulatory approval it needed--an obscure one from the U.S. Department of Transportation--will not delay the deal. Pinnacle used its bankruptcy to cut deals with its three main unions that call for deep concessions among those workers. It also focused on cutting its operating costs in the ever-competitive airline industry and ended up in the wings of Delta, its only remaining customer. The deal calls for Pinnacle to nearly double the number of large planes it flies for Delta to 81 and to phase out its fleet of smaller planes.

AMR Corp., the parent company of American Airlines, filed formal plans to exit bankruptcy yesterday, bringing its proposed $11 billion merger with US Airways Group closer to reality, Reuters reported yesterday. The reorganization plan, which details some executive compensation and outlines measures for creditors and shareholders, is a necessary step before the two companies can come together to create the world's largest airline. The plan requires both court and creditor approval. Under the plan, AMR's outgoing chief executive, Tom Horton, would receive a $19.9 million severance package. Bankruptcy Judge Sean Lane declined to approve the same severance proposal earlier this month, ruling that it was not permitted under federal bankruptcy law, but suggested it be included in AMR's reorganization plan, making it subject to creditor approval. Secured creditors would be paid in full, while unsecured creditors would receive shares of preferred stock.

Bankruptcy Judge Sean Lane has denied a proposed $20 million severance payment for the CEO of American Airlines as part of the company's merger with US Airways, the Associated Press reported today. The judge ruled yesterday that the proposed payment to CEO Tom Horton exceeded limits that Congress set for bankruptcy cases by BAPCPA in 2005. The U.S. Trustee's office had objected to Horton's compensation. At a hearing last month, however, Judge Lane approved the plan for American Airlines parent AMR Corp. to merge with US Airways Group Inc. in a deal that would create the world's largest airline. The merger is being reviewed by U.S. antitrust regulators. Under the merger deal, the new company will be called American Airlines but run by US Airways CEO Doug Parker. Horton would serve as chairman for a few months and then leave with a severance of $19.875 million equally divided between cash and stock. The Trustee's office argued that severance payments to insiders such as CEOs cannot be more than 10 times the average severance pay for non-management employees.

Two investment firms are in discussions with Republic Airways Holdings Inc. to acquire discount-carrier Frontier Airlines in a deal that could be valued at more than $1 billion including debt, the Wall Street Journal reported today. Indigo Partners LLC, a Phoenix-based private-equity firm that specializes in airline investments, and Anchorage Capital Group LLC, a New York investment firm focused on distressed-debt trading and sectors including airlines, are competing to take control of Frontier. Under the contours of a deal currently being discussed, a buyer would pay between $20 million and $50 million to purchase Frontier from Republic and then recapitalize the airline with an additional $100 million to $150 million. A buyer would also assume hundreds of millions of dollars of liabilities. There is also a scenario under consideration in which Republic would retain a minority stake in Frontier, they said. The details surrounding any deal remain fluid and could change as negotiations progress.

The parent of American Airlines yesterday said that it had settled the last of a trio of disputes with some of its largest ticket sellers, the Wall Street Journal reported today. AMR Corp. and online travel agent Orbitz Worldwide Inc. said that they had reached a deal to settle all litigation following years of disputes between the carrier and companies that distribute its flights and services, culminating in a series of suits and countersuits related to alleged antitrust violations and breach of contract. American had already clinched deals with two of the largest intermediaries—Travelport Ltd., which owns 48 percent of Orbitz, and Sabre Holdings Corp.—which paves the way for the carrier to offer more services direct to travel agents via an online system. Airlines have for years been trying to force changes in the way that the intermediaries operate, pushing for more flexibility to sell tickets and so-called ancillary products through their own websites. The intermediaries had pushed to have access to all airline products.