American Airlines parent AMR Corp. won bankruptcy court approval of the deal it reached this month with regulators to consummate its $17.2 billion merger with US Airways Group Inc. and create the world’s biggest airline.

The Nov. 12 accord with the U.S. Justice Department, which agreed to drop its antitrust challenge if the carriers gave up some airport slots, was approved today by U.S. Bankruptcy Judge Sean Lane in Manhattan. Lane said he would post a written version of his ruling today at noon.

The Washington judge in the antitrust case must also approve the proposed settlement after accepting comments from the public through Feb. 7.

The deal with US Airways is the linchpin of Fort Worth, Texas-based American’s bid to emerge from bankruptcy after almost two years and repay creditors. Lane approved American’s bankruptcy reorganization plan in September, while barring it from taking effect until the underlying merger won regulatory clearance.

To resolve regulators’ concerns that the deal would give the merged airline too much clout at Washington’s Ronald Reagan National Airport and boost prices, American and US Airways agreed to divest 52 pairs of takeoff and landing slots there. The combined carrier will also give up 34 slots at New York’s LaGuardia Airport and make smaller concessions at five other airports.

Consumer Harm

The Justice Department filed the antitrust lawsuit in August to block the merger of American and Tempe, Arizona-based US Airways, arguing it would raise prices and harm consumers. American could emerge from bankruptcy and compete on its own without the merger, the U.S. said.

American and US Airways said a merger was the only way they could compete with United Continental Holdings Inc. and Delta Air Lines Inc., the industry’s biggest carriers. They argued the deal would give passengers more choices and generate more than $500 million a year in benefits.

AMR’s total value for its stakeholders under the reorganization plan is about $13.1 billion based on current trading, representing an increase of $2.7 billion since Aug. 7, when a valuation was last completed, Stephen Karotkin, a lawyer for the company, told Lane at a Nov. 25 hearing.

More on the American Air-US Airways Merger

“This hearing represents the culmination of perhaps the most successful Chapter 11 case for an airline in recent history,” he said, calling the value created for creditors a “remarkable achievement.”

Parker Stays

After the merger, US Airways Chief Executive Officer Doug Parker will hold that title at the combined airline, while AMR CEO Tom Horton would serve as chairman until the first annual meeting of the merged carrier.

The merger agreement gives 28 percent of the stock of the combined company to US Airways shareholders, with the remaining 72 percent going AMR creditors, unions, certain employees and shareholders.

The bankruptcy case is In re AMR Corp., 11-bk-15463, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The antitrust case is U.S. v. US Airways Group Inc., 13-cv-01236, U.S. District Court, District of Columbia (Washington).

With assistance from Sara Forden and David McLaughlin in Washington. Editors: Mary Romano, Andrew Dunn. To contact the reporter on this story: Erik Larson in New York at To contact the editor responsible for this story: Andrew Dunn at

Photo Credit: U.S. Airways CEO Doug Parker will become the CEO of the new American Airlines after the merger is finalized. Mike Stone / Reuters