March 17 The U.S. trustee overseeing American
Airlines' bankruptcy has asked the carrier to justify its offer
of $19.9 million in severance pay to Chief Executive Tom Horton,
part of compensation linked to its merger with US Airways Group
Trustee Tracy Hope Davis said in a filing on Friday to the
U.S. Bankruptcy Court in New York that American had not
explained why that level of severance pay and "sweeping changes"
to various employee pay programs were permissible under the
The merger of American parent AMR Corp and US
Airways, announced on Feb. 14 and subject to various approvals,
would create the world's largest air carrier.
Horton, who became American chairman and CEO at the time of
the carrier's Chapter 11 filing in November 2011, is due to
serve as chairman of the new American Airlines Group Inc until
the first annual meeting of shareholders in 2014. US Airways CEO
Doug Parker will be CEO of the merged company.
American spokesman Andy Backover said in a statement the
carrier did not believe the objection filed by the U.S.
Trustee's office had merit. The matter is scheduled to be
considered by the U.S. Bankruptcy Court on March 27.
The company said the proposed employee arrangements were
found to be reasonable by pay consultants retained by its
unsecured creditors committee.
It added that the payments would "motivate a strong
management team during the integration process" to make the
merger a success.
The merger is expected to close in the third quarter.