In November 2011, American Airlines was approved to file for bankruptcy protection, as reported by the New York Times in a March 27, 2013 news article.

In an attempt to stabilize the airline’s finances, the company will be combining with US Airways and form the biggest airline company. In a released statement, the Presiding Bankruptcy Justice stated that this merger will be positive for both of the companies. Although the Justice signed off on the merger, the Justice declined to allow the airline’s proposed severance package. The assigned trustee argued that the package violated certain restrictions established under Federal Bankruptcy law. This payment package included $19.9 million in cash and stock along with a lifetime of free first class tickets to Thomas Horton, the company’s executive chief.

American Airlines has been working on completing their Chapter 11 bankruptcy petition since November 2011. One of the reasons the bankruptcy has taken so long is the airline has refused and resisted cutting the company’s labor and employment costs. This merger should help with the company not having to make all of these cuts. The merger must still be approved by the Justice Department antitrust regulators and US Airways shareholders, but it is believed to be fully completed by the fall. The Justice Department will more than likely sign off on allowing the merger because now the creditors will get receive the full amount owed to them. In a majority of bankruptcy cases, the creditors only receive a portion of the total debt.

If you are considering bankruptcy, contact the law office of Jayson Lutzky, P.C. We handle both personal Chapter 7 and Chapter 13 bankruptcies. Mr. Lutzky has over 29 years of experience practicing law in the State of New York. To set up a free in person consultation, please call 1-800-660-LAWYER (5299). Visit our Website,, for more information.