We are another step closer to the merger of US Airways and American Airlines today following a hearing in the bankruptcy court in New York City. The planned merger was approved by the judge overseeing the bankruptcy reorganization of AMR, American’s parent company. The approval was expected and allows the two carriers to move forward with their efforts, though it is also far from the last approval needed.
But it was not all smooth sailing during the hearing. Tom Horton, the current CEO of American, is due to receive a severance payout of $19.9 million in cash and stock as part of his stepping down for Doug Parker to lead the combined company. That part of the deal was blocked by the judge who stated, "Approving it today is just not appropriate." It seems that there are issues with the way the bankruptcy code is written and the fact that the merger was consummated in bankruptcy rather than after AMR emerged from the court’s protection. The judge noted that he doesn’t object in principle to the payout but that the law simply didn’t allow him to approve it at this time.
Perhaps this is why Horton was so adamant for so long about wanting to emerge from bankruptcy before agreeing to merge with US Airways. Odds are that he’ll get paid anyways eventually so maybe this is more of a delay than denied. Still, it is always interesting to watch these processes play out.
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What has Tim Horton accomplished to earn $19.9 million? Other than delivering AA to US on a platter.
He successfully brought delicious doughnuts and coffee to AA flights.
Maybe because he is a purveyor of fine coffee and donuts?
I have to double-check myself every time I write about this, Bill, to make sure I get the correct T. Horton in the post. 😮