A federal official opposes a nearly $20 million severance payment to Tom Horton, the CEO of the parent of American Airlines, in the proposed merger with US Airways.
The U.S. trustee says Fort Worth-based American and AMR Corp. failed to explain how severance and retention payments for management employees are allowed under a 2005 change in the bankruptcy laws.
Tracy Hope Davis with the Justice Department lodged her objections Friday.
AMR spokesman Andrew Backover says agreements in the merger reasonably and appropriately compensate employees and are in line with industry precedents.
A bankruptcy judge has scheduled a March 27 hearing to consider the merger proposal. The combined company would keep the American name but be run by US Airways CEO Doug Parker.
On Tuesday, Horton and Parker both appeared in front of a Senate antitrust committee to discuss the merger. Watch live here beginning at 9 a.m.