American Airlines had planned to exit bankruptcy protection by merging with US Airways Group Inc. The merger would create the biggest airlines in the world. American Airlines had been seeking to push through with the merger. This was after the US Justice Department sued the company as it plans to block the deal.

The petition to exit bankruptcy was approved by US Bankruptcy Judge Sean Lane today in Manhattan prior to the deal's approval. According to the bankruptcy judge, the Chapter 11 reorganization plan by AMR Corp, American Airlines' parent, would only take effect until the merger had gotten regulatory clearance.

Lane said, "There can be no dispute that the plan is feasible if the merger succeeds."

The decision is a big win for the Texas based airline company even with the impending trial of the US antitrust lawsuit scheduled months away. The airline said that failure to approve the proposed deal would destabilize the company and create uncertainty, according to a Bloomberg report.