NY court approves AMR-US Airways merger

As we reported previously on this blog, AMR and Tempe-based US Airways came to agreement on terms for a merger that would create the world's biggest airline. However, the deal was tentative on court approval for bankruptcy reorganization AMR subsidiary American Airlines.

On Wednesday, a judge in New York made the decision to allow the merger between the two airlines while also ruling against what he called a "golden parachute" for outgoing AMR CEO Tom Horton.

In the ruling U.S. Bankruptcy Judge Sean Lane, said that the $19.9 million severance package for Horton was not appropriate as part of the restructuring heading into the merger. Meanwhile, Horton said the payout was not his call.

"It's up to the board of directors and the company. I'm probably the one guy who doesn't have anything to say about it," Horton said to The Wall Street Journal Wednesday. "All year long I've been focused on creating a successful American Airlines and that's what I'll be focused on to the last day."

The ruling has enormous implications for the business sector, particularly in terms of companies trending toward mergers and establishing more commercial juggernauts. However, what is more telling in this case is the fact that the severance package was the "only hangup" for the merger, showing signs that the courts are willing to approve such transactions, despite the financial woes of one of the companies involved.

With the economy on the rise, it may be time for businesses to re-evaluate their financial standing and how they fit within a certain market. In addition to the airline merger, deals involving Heinz and an impending deal with Dell have set the tone for companies to make a splash in hopes of invigorating their business. Local businesses looking to make a change of their own are encouraged to seek out the services of a Phoenix small business attorney.

Categorised in: Contracts & Transactions

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