Court allows AMR to keep reins on bankruptcy through December

NEW YORK (Reuters) - American Airlines' bankrupt parent AMR Corp won court approval on Thursday to extend through December 28 its exclusive right to present a plan to emerge from bankruptcy.

Judge Sean Lane granted the request, which was supported by AMR Corp's creditors' committee, at a hearing in U.S. Bankruptcy Court in Manhattan. The current exclusivity period was to have run out in September.

AMR went bankrupt in November, citing an untenable labor cost structure.

The extension, which blocks creditors from pushing their own proposals on how AMR should restructure its debt, comes amid efforts by US Airways Group to merge with AMR. The American Air parent has said it would prefer to present its own plan to emerge from bankruptcy independently, then consider a possible tie up.

Extending the exclusivity period does not necessarily kill the prospect of a merger in bankruptcy. At the behest of its creditors, AMR is considering merger partners as part of its restructuring, and the sides could still negotiate a consensual merger deal during bankruptcy.

US Airways is considered the leading contender for a merger, but a source has told Reuters that AMR is also speaking with other airlines.

US Airways recently acquired a piece of AMR debt, making it a creditor and allowing it to be heard at the bankruptcy hearings. In court papers earlier this month, US Airways said it supported the extension of AMR's exclusivity period.

A lawyer for US Airways tried to address the court at Thursday's hearing, but Judge Lane said he did not want to be distracted by merger talk.

"I know a creditor, but there are a lot of creditors in the case," Lane said. "I don't want to get sidetracked on that particular issue this morning."

The case is In re AMR Corp et al, U.S. Bankruptcy Court, Southern District of New York, No. 11-15463.

(Reporting by Nick Brown; Editing by Martha Graybow and Bernadette Baum)

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