The judge in the American Airlines bankruptcy just expressed doubts the airline will survive:
A judge asked AMR Corp for guidance on whether he should approve its plan to exit bankruptcy, in light of an antitrust challenge to its planned merger with US Airways Group Inc.
The request suggested Judge Sean Lane would hold off on approving AMR's plan at a hearing in U.S. bankruptcy court in New York on Thursday.
Lane said he had "lingering doubts" as to whether it was appropriate to confirm the plan. He told AMR, its creditors and other parties in the bankruptcy to submit briefs on the issue.
Lane said he had strongly considered canceling Thursday's hearing but decided to give parties an open forum to discuss the antitrust challenge.
Absent the antitrust challenge, Thursday's hearing would have been the final step in AMR's exiting bankruptcy and implementing its merger.
This really sucks, not just for American's shareholders, but also for air travelers in the U.S. The Justice Department believes the merger will hurt air travelers, but Cranky has some good analysis why this isn't so. Plus, the Justice Department has had access to the competition data for years; that makes the timing of their case look suspect, in my mind.
And personally, my biggest beef with all this concerns the bank of frequent flier miles I've built up for many, many years now. If American can't merge with US Airways, all my miles might vanish. (US Airways has promised to honor them if the merger succeeds.) The judge and the Justice Department have made that much likelier this week.
My worst fear is that the bankruptcy proceedings could turn so rapidly there won't be time to cash in any of the miles, or even if I can cash them in, there won't be an airline around to honor the award tickets when I try to use them.
What, on earth, was the Justice Department thinking?