A group of unidentified aviation experts and investors said it would bid nearly $1 billion to acquire Trans World Airlines, doubling the amount American Airlines said it would pay to take over the troubled carrier.
Jet Acquisitions Group Inc. of Scottsdale, Ariz., wants to preserve TWA as an independent airline, retain most of its employees and eventually expand the airline.
“With Congressional hearings now underway to scrutinize the consolidation of the airline industry and its effects on competition and consumer prices we believe our effort to thwart the trend toward consolidation is particularly timely,” spokesman Stanford E. Lerch said in a statement.
Shrouded in Mystery
Michelle Tuchman, a spokeswoman for the company, would not provide details about the group, other than to say that it included “former airline executives and general investors.” Carl Icahn, the billionaire financier who formerly ran TWA, was not involved, she said.
Including the assumption of $3.5 billion in lease obligations and $1.7 billion that would be spent on expanding TWA’s fleet, Tuchman said the total value of Jet Acquisitions’ offer would be $6.2 billion.
American’s bid for TWA included the acquisition of parts of US Airways from United Airlines and a large stake in a new startup carrier for $1.8 billion in cash and $3.5 billion in lease obligations.
Can TWA Survive Alone?
David Stempler, president of the Air Travelers Association, said he doubts TWA could survive as an independent entity—noting that similar-sized airlines such as Pan Am Airlines have gone out of business.
“The best for TWA in terms of its employees, the city of St. Louis, and for airline passengers, is probably to have it folded or merged into a larger airline to continue its operation,” Stempler said.
American, based in Fort Worth, Texas, has said it would pay $500 million for most of TWA’s assets, including up to 190 planes and the St. Louis hub. It also would pay $82 million for a 49 percent stake in DC Air, a minority-owned startup of United Airlines and US Airways that would serve 44 markets out of Washington’s Reagan National Airport.
American’s proposal is awaiting approval of federal regulators.
TWA Will Consider 'Better Legitimate Offer'
“The way it’s set up, anyone is free to bid,” American spokesman John Hotard said in response to Jet Acquisitions’ bid. “They’re free to bid whatever they want.”
A federal judge has extended the deadline for bids for TWA until Feb. 28.
“TWA will consider any higher and better legitimate offer,” TWA spokeswoman Julia Bishop-Cross said.
Edward Manhart, a spokesman for the International Association of Machinists, which represents TWA’s machinists and flight attendants, said the union expected more offers, but didn’t expect one so soon.
“I’ve been telling the membership that until all of the offers are on the table, to save a lot of feelings, we should wait until we see what all the offers are,” Manhart said in St. Louis.
TWA, based in St. Louis, has continued operations while bankruptcy proceedings occur.