• Merger between American, US Airways hits snag

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    WASHINGTON - There are new problems for American Airlines as it tries to get out of bankruptcy and merge with US Airways.

    The Justice Department is objecting to plans for employee raises and an exit package for the company’s CEO.

    The Justice Department’s trustee is overseeing the bankruptcy case and is saying the companies were not upfront with their payment plans when they agreed to merge.

    The purpose of the merger was to help American out of bankruptcy and ultimately create the largest airline in the nation.

    That could be good for Charlotte, which is a major hub for US Airways.

    The Justice Department said American failed to explain why the salary and benefit increases were allowed under the U.S. bankruptcy code.

    So the trustee filed court papers objecting to the proposed compensation plans.

    As part of the agreement, American CEO Tom Horton would get $19.9 million to step down from his role and act as chairman till next year.

    The Justice Department pointed out that is 10 times the amount of pay given to non-management employees.

    The issue is set to go before a bankruptcy court judge next week.


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