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The Boston Globe

Business

Judge disallows $20m severance to airline chief

DALLAS — A federal bankruptcy judge has at least temporarily blocked a proposed $20 million severance payment for the chief executive of American Airlines as part of the company’s merger with US Airways.

The judge ruled Thursday that the proposed payment to chief executive Tom Horton exceeded limits that Congress set for bankruptcy cases in 2005. A spokesman for American said Friday that the airlines would push ahead with their merger and deal with Horton’s compensation later.

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The US trustee’s office, part of the Department of Justice, had objected to Horton’s compensation.

Although Judge Sean Lane denied the severance under bankruptcy law, he left open the possibility of a payment as part of American’s final reorganization plan, which has not yet been filed.

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