American Airlines Chapter 11 Takes Off

: Chris Lee Law Firm

  Filed under: News

american airlinesA federal bankruptcy judge gave the go-ahead for the reorganization plan that Fort Worth airline giant American Airlines has proposed, paving the way for the company to exit its bankruptcy and complete its proposed merger with Tempe, AZ air carrier US Airways. There is a rather large barrier remaining to the merger, however, in the form of a U.S. Department of Justice antitrust investigation.

Chapter 11 Did Not Slow Merger

An American Airlines spokesman says that the company’s Texas bankruptcy filing and subsequent Chapter 11 reorganization did not affect the potential merger with US Airways much at all. In fact, the only roadblock has been the Department of Justice’s antitrust suit, which according to the spokesman will not go to trial. The merger has the backing of nearly every other party of interest, and the Department of Justice’s objections seem to show that they are not familiar with the intricacies of the airline industry. Therefore their suit, according to many bankruptcy lawyers close to the case, will not have the heft necessary to cause any serious disturbance. According to one impartial analyst, in fact, the Department of Justice’s entire case is based on hearsay and anecdotal evidence, and the numbers will plainly show them wrong.

If you are curious as to how a major airline can declare Chapter 11bankruptcy and still have the clout to beat a DOJ antitrust suit, the short answer is: it’s complicated. The long answer is: it’s really complicated. Big business being what it is, there are fairly regular instances of businesses filing Chapter 11 reorganizations and continuing to bring in quite a bit of revenue during the bankruptcy process.


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