Judge Balks at CEO Payout in American Airlines Merger

He approves deal but won't sign off on $20M severance

By John Johnson,  Newser Staff

Posted Mar 27, 2013 5:44 PM CDT

(Newser) – A bankruptcy judge today signed off on a proposed merger between American Airlines and US Airways that would create the world's biggest airline, but he's not quite ready to approve a fat severance package for outgoing American CEO Tom Horton, reports the Wall Street Journal. The two companies plan to give Horton $20 million when the merger is complete, but the judge said it would be "inappropriate" to give his blessing just yet. He promised to provide a written opinion on the payout, which is opposed by the US trustee overseeing the bankruptcy of American parent AMR Corp.

This doesn't mean Horton isn't getting his severance, notes the Journal, although the timing and amount could change. The AP notes that he is also getting free first-class tickets for life on the merged airline, which will keep the name American Airlines. As for the merger itself, the judge's approval means it is now on track to be complete by the third quarter, assuming creditors and US regulators don't raise any late objections.

American Airlines President and CEO Tom Horton in a 2011 file photo.   (AP Photo/ Richard W. Rodriguez)
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