American Airlines

A U.S. judge says American Airlines can exit bankruptcy and join forces with US Airways Group, all but ensuring that their merger can take place within weeks. Wednesday's bankruptcy court ruling was one of the final hurdles for a huge merger that's been in the works for more than a year.

The ruling by Judge Sean Lane comes months after he gave his preliminary approval to the plan. The two companies are now planning to finalize their merger on Dec. 9, when they would combine to create the world's largest airline.

A U.S. bankruptcy judge on Thursday indicated that he's leaning in favor of a allowing American Airlines to emerge from bankruptcy, clearing a major obstacle to the carrier's planned merger with US Airways.

Judge Sean H. Lane said he is "finding the arguments in favor of confirmation fairly persuasive" to allow American, which filed for Chapter 11 in November 2011, to emerge from bankruptcy.

A merger of American Airlines and US Airways would violate U.S. antitrust law, the Justice Department, six state attorneys general and the District of Columbia allege in a lawsuit filed Tuesday in Washington, D.C.

Bloomberg reports that Justice alleges the merger would lead to "less competition in the industry and higher prices for consumers." The wire service explains:

A computer glitch in the reservations system at American Airlines caused all of the carrier's flights to be grounded for at least two hours on Tuesday.

"American's reservation and booking tool, Sabre is offline," American Airlines spokeswoman Mary Frances Fagan told Reuters in an email. "We're working to resolve the issue as quickly as we can. We apologize to our customers for any inconvenience."

NPR's Wade Goodwyn reports that the outage was announced about 2:30 p.m. Eastern time.

Update at 6:50 a.m. ET, Feb. 14: News Is Confirmed.

Statements confirming the news that directors of US Airways and American Airlines have agreed to merge the airlines have now been released by both companies.

American says:

Pat Henneberry is an airline's dream customer. She flies all week, every week, and buying an $800 ticket so that she can have full flexibility is standard operating procedure. She's an American Airlines platinum customer. But she is fed up with the endless delays and cancellations.

American Airlines has one canceled arrival at Austin Bergstrom International Airport this evening. While that may not sound like much – at least not to anyone booked on that flight – it may be symptomatic of a broader problem for Dallas-based American Airlines.

Against the backdrop of a labor struggle, American has seen some 300 flights canceled this week, as according to reports, pilots are calling in sick.

According to CBS News,

American has seen an increase in flight cancelations since early this month, when a federal bankruptcy judge allowed the company to impose new pay and work rules on pilots. The pilots had rejected the company's last contract offer in August.

Those new work rules increase the amount of flying hours on pilots, and allow American to operate more flights through partner airlines instead of American flight crews, according to CNNMoney.

Imagine going into bankruptcy with billions of dollars in cash still in your bank account. That's what American Airlines did last November. The thinking was that management would gut the company's pensions and union contracts and emerge from bankruptcy ready to compete.

But then US Airways said it could take over American and be profitable, and it wouldn't have to hurt American's employees nearly as bad in the process. American's pilots, mechanics and flight attendants loved that idea.

Photo by caribb

Even though American Airlines’ parent, Forth Worth-based AMR, filed for bankruptcy today, passengers may see no changes in the carrier’s operations.

Every so-called legacy carrier, including United, Delta and Continental, filed for bankruptcy after the 9/11 slump. American did not. The others restructured operations, business deals, employee contracts and benefits, and emerged making money. Not American.

Now, AMR’s new CEO, Tom Horton, says it’s time.  He said in a statement that American’s cost disadvantage compared to competitors is untenable. Plus, the economy, revenue and fuel costs are uncertain and unstable.