American, US Airways extend merger agreement in the face of lawsuit

Facing a lawsuit by the U.S. Department of Justice, the parent companies of American Airlines and US Airways have agreed to extend their merger plans for an extra month.

The expiration date to merge the airlines to create the nation’s largest airline has been moved from Dec. 17 to Jan. 18, AMR Corp. and US Airways Group announced in a joint statement.

A trial to hear the Justice Department’s challenge to the merger is scheduled to begin Nov. 25 at a district court in Washington. AMR, which had filed for bankruptcy in 2011, had hoped the merger would allow the carrier to clear bankruptcy.

If the judge hearing the Justice Department’s suit rules against the challenge before Jan. 17, the airlines will have 15 days to approve the merger.

The extension simply means that both airline companies are committed to the merger despite the legal challenge. The Justice Department says the merger would reduce competition, cut service to smaller cities and lead to higher fares.

“The boards and management teams of AMR and US Airways remain committed to completing this combination to create the new American, and the extension of this outside date is a reflection of this commitment,” Tom Horton, president and chief executive of AMR, and Doug Parker, chairman and chief executive of US Airways, said in a joint statement.

AMR and US Airways have also agreed to drop a $20-million severance package for Horton after the judge overseeing AMR’s bankruptcy rejected the amount.

ALSO:

Super-cheap airline may be ready for takeoff

Proposed airline merger could prevent fare increases

Bill would require a second cockpit door on commercial aircraft