AA and US Airways Get the Go-Ahead for Merger

A federal bankruptcy judge gave the okay for US Airways (NYSE:LCC) and American Airlines to continue with their merger, which would make the biggest airline company in the world. The airline will operate under the American Airlines name.

CNN reports that after announcing plans for an $11 billion merger last month, the two companies released a joint statement that Judge Sean Lane’s decision “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.”

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An integral point that the judge did not agree on was the severance pay for outgoing American Airlines CEO Tom Horton, who will relinquish his chief executive position but stay on as non-executive chairman. He was set to be paid $19.9 million. Judge Lane cited a ruling in bankruptcy law as a main factor in his decision to deny Horton the hefty severance, which would be split 50/50 between cash and stock in the new company.

US Airways CEO Doug Parker is set to hold the same position with the merged company, which will reportedly offer 6,700 daily flights and annual revenue of $40 billion.

The new airline will join United Continental (NYSE:UAL), Delta Air lines (NYSE:DAL) and Southwest Airlines (NYSE:LUV) as the leader of the big four in air travel. Together, the group was responsible for 83 percent of U.S. flights last year.

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