Bankruptcy, American Airlines | featured news

A federal bankruptcy judge has at least temporarily blocked a proposed $20 million severance payment for the CEO of American Airlines as part of the company's merger with US Airways. The judge ruled Thursday that the proposed payment to CEO Tom Horton exceeded limits that Congress set for bankruptcy cases in 2005.

The subject of CEO compensation looks like it will get time under the microscope in American Airlines' Chapter 11 bankruptcy case. The U.S. trustee overseeing the bankruptcy case of American parent AMR has filed an objection to the $19.8 million severance package that current CEO Tom Horton is set to get when he leaves the company next year, according to Reuters. Also included in the objection are severance and retention payments slated for other company employees.

The total fees billed by lawyers, consultants, investment advisers and the like working on American Airlines Inc.’s bankruptcy case have topped $100 million — and are sure to go much higher. With most professionals having now submitted their monthly bills through May, the fees have reached nearly $104 million, with $5.5 million more requested for reimbursement of expenses, according to a Dallas Morning News tabulation from court filings.

American Airlines' parent company is seeking Chapter 11 bankruptcy protection as it seeks to unload massive debt built up by years of accelerating jet fuel prices and labor struggles.