American Airlines in bankruptcy court despite suit

DALLAS American Airlines parent AMR Corp. plans to ask a bankruptcy judge to approve its turnaround plan that includes a merger with US Airways even though the federal government has sued to block the deal.

Thursday's 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. Fort Worth-based 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 filed for bankruptcy protection in November 2011 after losing billions of dollars in the previous decade.