By Alan Clendenning
AP Business Writer
NEW YORK — When Carl Icahn took over Trans World Airlines in the mid-1980s, the troubled airline's baggage handlers dubbed him "Uncle Carl.'' They saw the billionaire corporate raider as a savior — at first.
Later, they used the nickname to scorn the boss they accused of pocketing handsome profits before relinquishing control of TWA in 1993.
And now, Icahn has emerged as a possible buyer of the bankrupt airline, reviving bad memories for longtime pilots, flight attendants and ground crews. They hope a judge will exclude Icahn's $650 million bid during a bankruptcy hearing Friday.
"He doesn't care about the employees of TWA,'' said Joe Tiberi, a TWA union spokesman who started with the airline as a baggage handler at John F. Kennedy Airport. "Shortly after I came on, he starting selling the international routes. Our feeling was that he was going to sell the airline off piece by piece so there was nothing left.''
The board of TWA expressed similar disinterest in turning the company over to Icahn last night, when it selected a sweetened $742 million offer from AMR Corp.'s American Airlines as its preferred takeover bid.
The final decision, however, still rests with U.S. Bankruptcy Judge Peter Walsh, who will consider offers from American, Icahn and others during the sale hearing in Wilmington, Del.
In interviews with a dozen employees at TWA's St. Louis hub, not one looked forward to working for a company owned by Icahn. They talked about going years without raises, making other concessions to keep TWA afloat and becoming owners of company stock that is now worth nothing.
"We gave quite a bit to Carl Icahn,'' Bill Rody, a mechanic and TWA employee for 27 years, said bitterly. "Life was miserable. We suffered and suffered and saw the airline disintegrate.''
Icahn got involved with TWA by winning a takeover contest against airline executive Frank Lorenzo in 1985. The 20,000 members of the airline's unions were pleased with the outcome because Lorenzo was well-known for canceling Continental Airline's union contracts and sharply cutting wages several years earlier.
But months after taking control, Icahn persuaded union pilots and mechanics to take a wage cut in return for a 15 percent stake in the company. A year later, he fired 5,000 striking flight attendants after they refused to accept wage cuts and increased hours.
In 1988, Icahn took the company private, a move that gave him $469 million but saddled TWA with $540 million in debt. By the early 1990s, the company was hurting financially. Icahn sold six London routes to American Airlines in 1991 for $495 million.
The next year, TWA filed for bankruptcy. A reorganization gave creditors a 55 percent interest in the airline and the unions the remaining 45 percent for agreeing to cost-saving concessions. Icahn resigned after negotiating a deal that gave him the right to buy some TWA tickets for 55 cents on the dollar in exchange for a $200 million loan.
The financier now sells tickets from that deal on the Internet at about 20 percent below published prices. Some critics have said the arrangement has been a major hurdle for TWA's profitability.
In January, TWA filed for bankruptcy again, hours after its board approved the initial $500 million buyout from Fort Worth-based AMR, the parent of American Airlines. American, which increased its bid yesterday afternoon by $242 at the request of TWA, has indicated it does not plan to honor the ticket contract with Icahn.
Icahn didn't return telephone messages left at his New York office seeking comment. But Brian Freeman, the investment banker heading the Icahn-backed bid, said the proposal is a legitimate effort to keep TWA operating as an independent carrier.
Icahn would be a "passive lender'' this time around, meaning he would not be involved in day-to-day operations, Freeman said. The proposal would, however, preserve Icahn's lucrative ticket deal.
Freeman said employees would have to make concessions to help make the airline profitable and to limit job cuts.
Freeman, who represented the TWA machinists union in its battles against Icahn during the 1980s and early 1990s, said workers should be grateful to Icahn because he kept the airline operating and saved their jobs.
"Absent Icahn TWA would have been liquidated a decade or a decade and a half ago,'' Freeman said. "Carl didn't take advantage of some opportunities he should have taken advantage of, but he invested money to keep TWA going.''
Tiberi scoffed at Freeman's take on Icahn's place in TWA history.
"Anybody who thinks that TWA employees should be grateful for anything Carl Icahn did has an unnatural view of the world,'' Tiberi said.
And he ridiculed the idea that Icahn might not take an active role in the airline after putting up so much money to buy TWA.
"Carl Icahn is not going to invest any kind of money where he won't be able to guarantee profits in his pocket,'' Tiberi said. "Brian Freeman may think he's running it but Carl Icahn will always run his own show.''
After arriving home on a flight to the St. Louis airport, flight attendant Chopper Leifheit said he's trying not to think about the possibility of Icahn running TWA again.
"I'd like to see that part of our history remain history,'' said Leifheit, a TWA employee for 15 years.
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