UPDATE 1-AMR urges court to back restructuring despite antitrust lawsuit
Aug 23 (Reuters) - American Airlines on Friday urged a bankruptcy judge to approve its Chapter 11 restructuring plan despite an antitrust challenge from the U.S. Department of Justice to its proposal to merge with US Airways Group.
In court papers filed in U.S. Bankruptcy Court in Manhattan, American's bankrupt parent, AMR Corp, said failing to approve the restructuring would add "a destabilizing factor" to the merger deal and plans to pay back creditors.
The DOJ on Aug. 13 filed a lawsuit to block the proposed $11 billion merger, saying the deal would increase fares and hurt consumers.
Merger plans under Chapter 11 must gain both court and regulatory approval, and one does not affect the other. But in a hearing last week in U.S. Bankruptcy Court in Manhattan, Judge Sean Lane held off on approving the plan in light of the DOJ's concerns.
Lane said he was hesitant to approve a plan that might change significantly through settlement negotiations with the DOJ.
In its Friday filing, AMR said any significant changes to the plan, namely divestitures, would have to be brought back to Lane for approval.
AMR filed for bankruptcy in 2011 to reduce labor costs and decrease debt. It agreed to merge with US Airways in February.