DALLAS (AP) -- American Airlines parent AMR Corp. plans to ask a bankruptcy judge on Thursday to approve its turnaround plan that includes a merger with US Airways, even though the federal government has sued to block the deal.
The hearing in New York had been expected to be one of the final steps before AMR could close the merger and exit bankruptcy protection after nearly two years.
But AMR could spend several more months in bankruptcy court while it fights to save the merger. The U.S. Justice Department and six states sued to block the deal on Tuesday, saying it would hurt competition and cause consumers to pay higher fares.
AMR executives "would have preferred that (Thursday's) hearing be the final episode in this long effort," said Joe Sims, an antitrust lawyer in Washington who was hired by American. "It's not going to be now, and they will deal with that."
AMR filed for bankruptcy protection in November 2011 after losing billions of dollars in the previous decade. The company, which also owns the American Eagle regional airline, has used the bankruptcy process to rework labor contracts and claim other cost savings. Last month, it reported its first second-quarter profit in six years.
In February, it announced plans to merge with US Airways, a deal that would make American the world's biggest airline in terms of miles flown by passengers.