Court allows AMR to keep reins on bankruptcy until 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 and as the American Airlines parent prepares to review a range of strategic options including potential mergers while it is in bankruptcy.

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.

AMR Chief Executive Tom Horton met with US Airways Chief Executive Doug Parker early on Thursday, and assured his counterpart that AMR's strategic review process would be "objective" and "fact-based" and there is no pre-determined outcome, according to people familiar with the matter.

Horton said during the meeting that the company has the obligation to pursue a plan that achieves the highest value for its financial creditors and will take the necessary time to run the process, the people said. They asked not to be named because the meeting was not public.

US Airways is considered as the leading contender for a merger by many industry analysts, but sources have told Reuters that AMR is also speaking to other carriers and investors about a potential tie-up.

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, additional reporting by Soyoung Kim in New York,; Editing by Martha Graybow, Bernadette Baum and Leslie Gevirtz)

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