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Judge OKs American Air merger, bankruptcy exit

DALLAS A federal judge has approved American Airlines' plan to emerge from bankruptcy protection and merge with US Airways, although the airlines must still resolve a lawsuit filed by the federal government seeking to block the merger.

A trial over that lawsuit is scheduled for November.

Thursday's ruling by federal bankruptcy Judge Sean Lane in New York provides at least the perception that the merger is still moving forward.

The airlines had originally hoped to close the merger this month and create the world's biggest carrier. They're now shooting for the end of the year, if they can either settle the antitrust lawsuit with the U.S. Justice Department or win the case in court.

Last month, Lane openly wondered whether he could approve American's reorganization plan before the merger won regulatory approval. On Thursday, he said he could if the turnaround plan looked financially sound.

AMR lawyers had argued that delaying approval of the plan would put ongoing support for the merger plan at risk

Lane said that if the airlines lose the antitrust case, American parent AMR Corp. will have to write a new restructuring plan that doesn't include the merger. If the airlines settle with the Justice Department - perhaps by giving up takeoff and landing slots at Reagan National Airport outside Washington - Lane would review terms of the settlement.