Bankrupt TWA prepares for sale
Advertiser News Services
PHILADELPHIA — The stage is set today for bankrupt Trans World Airlines to be sold to the parent company of American Airlines for $742 million, creating the nation's largest air carrier.
Over the weekend, the 3rd U.S. Circuit Court of Appeals in Philadelphia upheld a judge's decision to reject an 11th-hour plea filed by a committee of TWA's unsecured creditors that contended a bankruptcy judge in Delaware didn't give enough consideration to other offers for the carrier.
TWA filed for Chapter 11 protection in Delaware in January to speed the sale to AMR. With the acquisition, AMR is set to move past UAL Corp.'s United Airlines to become the largest carrier.
AMR officials said they had scheduled celebrations today with TWA employees in St. Louis and Kansas City.
"We are obviously pleased with the appeals court ruling," said Marty Heires, an AMR spokesman. "We are expecting to close this transaction (today)."
While the 3rd Circuit turned down creditors' delay bid, the judges agreed to bar some provisions of the buyout agreement from taking effect while the appeals court reviews the case. Those provisions relieve AMR of legal responsibility for discrimination claims filed against TWA.
The U.S. Equal Employment Opportunity Commission asked for the delay so that the appeals court could decide whether AMR should accept responsibility for bias claims filed against TWA by former flight attendants.
The appeals court also is expected to rule on a third delay request by a union representing TWA workers in Israel.
Lawyers for TWA said over the weekend that AMR can complete the purchase without violating the appeal court's order to delay some provisions of the agreement while the case is being reviewed.
AMR's offer has been cleared by U.S. Justice Department antitrust regulators and watchdogs from the U.S. Transportation Department.
TWA, based in St. Louis, was formed in 1930 from the merger of Western Air Express and Transcontinental Air Transport. That same year, the combined company became the first airline to offer coast-to-coast air service.
Movie mogul Howard Hughes once owned a controlling interest in TWA. In its prime, TWA was the airline of choice for the rich and famous. Joe DiMaggio made flights west on TWA to visit wife Marilyn Monroe in Hollywood. Four times, the pope flew TWA on visits to the United States. It was the first to offer nonsmoking sections on all aircraft.
But TWA had not posted an annual profit since 1989. Three years later, it filed for Chapter 11 bankruptcy protection, the first of three times it would do so. The last was on Jan. 10, the day the merger with American was announced.
American will also assume $3.5 billion in TWA debt.
