AMR Corp , American Airlines' bankrupt parent, on Wednesday received court approval to merge with US Airways Group Inc (LCC) and create the world's largest airline.

But one clause in the merger agreement - a $19.9 million severance package for Tom Horton, AMR's outgoing chief executive - was not approved by the judge at a hearing in U.S. Bankruptcy Court in Manhattan.

Judge Sean Lane said he will issue a written ruling explaining his decision regarding the severance package, which had brought an objection from the Department of Justice and skepticism from Lane at Wednesday's hearing.