AMR Corp., the parent company of American Airlines, received court approval yesterday on the agreement it reached in its ongoing labor dispute with pilots. The agreement will open the door for AMR, which is currently in bankruptcy, to take measures to cut costs.

The U.S. Bankruptcy Court in Manhattan also gave AMR approval to stop making lump sum payments of benefits to pilots when they retire. Two small groups including TWA pilots opposed the bargaining agreement. American bought part of TWA in 2001, and the pilots believed the new bargaining agreement means they will lose some of the benefits negotiated during that deal.

“Bankruptcy brings with it many hardships,” Judge Sean Lane said in his ruling yesterday. “The sacrifices of the pilots here along with the sacrifices of the other employees are one of those hardships.”

The question still remains, however, if AMR will emerge from bankruptcy as a standalone company or as part of a merger with US Airways, which its pilots support.

Read more InsideCounsel stories about American Airlines:

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