TWA Agrees to American Airlines Buyout
Jan. 10 -- The oldest name in passenger flight will soon disappear, as American Airlines has confirmed reports it will pay $500 million to acquire most of the assests of Trans World Airlines.
The complex deal, which also includes American agreeing to take over part of US Airways, will leave American with nearly a 25 percent market share of the airline industry.
Under the multipart agreement announced today, TWA's board of directors has approved a plan to file for Chapter 11 bankruptcy protection and will sell most of itsassets to American, a subsidiary of AMR Corp., for $300 million incash.
American will also assume responsibility for TWA's plane leasesand will also provide $200 million in immediate financing for theSt. Louis-based airline.
"We've agreed to purchase substantially all the assets of Trans World airlines for approximately $500 million and the assumption of aircraft operating leases," American Airlines CEO Donald Carty said at a press conference today in New York.
"And we have included in the transaction up to 190 airplanes, 175 gates and 173 slots."
American to Grow by 20 Percent
In a concurrent move, American is acquiring certain US Airwaysassets for $1.2 billion in cash and the assumption of $300 millionin aircraft leases. It will also pay $82 million for 49 percent ofstartup DC Air, which will fly out of Reagan National Airport inWashington.
The latter portions of the deal are contingent on federalregulators approving United parent UAL's $4.3 billion proposalto purchase US Airways. Antitrust regulators have pressed United,the largest carrier in the world, to sell off some of itsoperations before they approve its purchase of US Airways, thenation's No. 6 carrier.
If everything is approved, it would leave the Chicago-basedUnited and American, the nation's No. 2 carrier, head and shouldersabove the rest of the U.S. airline industry, each with roughly 25percent of the U.S. market. They are currently slightly larger thanNo. 3 Delta, which has 15 percent, according to industry figures.
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