Of the nation’s top airlines, TWA was the only carrier to lose money in 1999 — $353 million, the worst financial performance since the airline’s second financial reorganization in 1995. It was on pace to do worse in 2000, despite increasing revenues. Through the first three quarters, TWA lost $115.1 million.
The Wall Street Journal reported that the deal calls for American to step in and provide financing after TWA’s bankruptcy filing. The newspaper said the equity value of the TWA deal is small and talks on the debt are ongoing. Sources told the newspaper that the total value of the assets and the assumed liabilities is expected to be about $2 billion, depending on what value is given to some of the liabilities.
TWA’s hub operation at Lambert Airport in St. Louis would give American a third hub in the middle of the country. American already operates hubs at Chicago’s O’Hare International Airport and at Dallas-Fort Worth International Airport.
The sale continues a trend of consolidation in the airline industry that started when United Airlines, the nation’s largest carrier, announced plans to buy US Airways. The Justice Department has yet to sign off on that merger, but the department has approved an alliance between Northwest Airlines and Continental Airlines.
ABCNEWS’ Bob Jamieson, ABCNEWS Radio’s Clarissa Douglas, The Associated Press and Reuters contributed to this report.