NEW YORK (AFP) - A US bankruptcy court judge approved Wednesday the merger of American Airlines and US Airways, which will create the country's largest airline, a spokesman for American's corporate parent AMR Corp said.

But the judge left undecided the US$19.9 million (S$24.7 million) payout planned for AMR chief executive Tom Horton, who will lose his job in the merger.

The judge "has approved moving on with the merger," said spokesman Casey Norton.

However, as for Horton's severance, "he wants to consider it at a later time," said Norton.

Some American Airlines creditors have reportedly raised objections to the payout as the company emerges from bankruptcy restructuring.

The combined airline, to keep the American Airlines name, is to be led by current US Airways chief executive Doug Parker.