By JAD MOUAWAD
A federal judge approved American Airlines’ bankruptcy plan on Thursday but ruled that the decision was contingent on Justice Department approval of the carrier’s merger with US Airways.
Judge Sean H. Lane of the United States Bankruptcy Court in Manhattan confirmed American’s proposal to exit restructuring proceedings nearly two years after the carrier filed for bankruptcy. As part of the plan, American agreed this year to merge with US Airways, a move that received the backing of creditors as well as its three main labor groups.
But the merger was challenged by antitrust regulators who filed a lawsuit in August to block it on the grounds that it would harm competition and passengers. The airlines have vowed to fight the challenge and a trial is scheduled for November before a separate federal court in Washington.
Thursday’s ruling was supposed to cap a two-year process after American sought court protection to reorganize its business, cut costs and rewrite labor agreements in November 2011. It had initially vowed to emerge as an independent airline, but eventually succumbed to the efforts by US Airways to merge.
Updated, 9:02 p.m. | Both carriers have argued that they needed to combine their networks to be able to better compete with Delta Air Lines and United Airlines, both bigger carriers that completed mergers of their own in recent years.
The elaborate plan was thrown off in August when the Justice Department’s antitrust regulators unexpectedly challenged the merger. It was the first time that regulators had sought to block an airline merger since 2001….