NEW YORK -- A federal bankruptcy judge signed off Wednesday on the $11 billion merger of American Airlines and US Airways.

The widely expected decision by Judge Sean H. Lane helps clear the way for the two carriers to form the world's biggest airline, with 6,700 daily flights and annual revenue of roughly $40 billion.

American has been operating under bankruptcy protection since November 2011.

The merger, first announced on Feb. 14, still needs approval from the Department of Justice and US Airways shareholders. It is expected to close by the fall.

Lane's decision was complicated by objections to the timing of a $20 million severance package for outgoing American CEO Tom Horton. Horton has agreed to step down as CEO and leave the company within a year of the merger's closing. The U.S. trustee objected to Horton's severance, saying it is in excess of limits set under the bankruptcy code. Lane decided not to approve that payment as part of his decision.

Once the deal closes, US Airways CEO Doug Parker will run the combined airline. Horton will step down as CEO and then leave the company's board within a year. The agreement calls for him to receive $19.9 million in cash and stock as well as a lifetime of free first-class tickets on American for himself and his wife.


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