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American Airlines CEO’s $20 million severance opposed by U.S. government

May 24, 2013 12:30 pm

Skift Take

The U.S. trustee raised objections to Horton’s severance earlier so this is not a complete surprise. Still, the issue of the American Airlines CEO’s golden parachute may become a little more pesky than initially envisioned. Maybe he’ll have to take a discount.

— Dennis Schaal

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American Airlines’ proposal to pay a $20 million severance to Chief Executive Officer Tom Horton as part of the carrier’s merger with US Airways Group Inc. is opposed by the U.S.

The severance payment violates bankruptcy laws, the U.S. Trustee’s office, a part of the Justice Department that monitors bankruptcy proceedings, said in a court filing today in New York.

American parent AMR Corp. has sought court approval of the severance under its plan to exit bankruptcy court protection by merging with US Airways. U.S. Bankruptcy Judge Sean Lane in Manhattan denied approval of the severance when he approved the merger agreement in March.

Sean Collins, a spokesman for Fort Worth, Texas-based AMR, didn’t immediately respond to an e-mail seeking comment about the objection.

The case is in re AMR Corp., 11-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

–Editors: John Pickering, Stephen Farr

To contact the reporter on this story: David McLaughlin in New York at dmclaughlin9@bloomberg.net

To contact the editor responsible for this story: John Pickering at jpickering@bloomberg.net

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