American completes deal for TWA
FORT WORTH, Texas – American Airlines’ parent company bought bankrupt Trans World Airlines on Monday, completing a deal that will offer travel to more than 300 cities worldwide on more than 900 planes.
”Today we celebrate a true milestone for the employees and customers of both American Airlines and TWA,” said Donald J. Carty, chairman and CEO of American Airlines.
American, the No. 2 carrier before the deal, will swap positions with No. 1 United Airlines. American’s newfound supremacy could be short-lived, though. The airlines will reverse positions again if United succeeds in its bid to obtain most of US Airways.
During a transition the airlines will operate independently, with separate reservation systems, payrolls, aircraft and policies.
”Gradually, over the span of several months, American will begin the extremely complicated task of merging work forces and working through all the other issues associated in joining two service companies in a dynamic industry,” American spokesman John Hotard said.
Earlier Monday, a federal appeals court cleared the way for the deal to be closed, denying a last minute bid by a group of Israeli TWA workers to stop the transaction.
The workers, members of the Jewish Labor Federation, claimed they were unsecured creditors owed about $18 million in salaries and benefits.
Fort Worth, Texas-based AMR Corp.’s paid $742 million for most of TWA’s assets and assumed $3.5 billion in debt.
Robert W. Baker, vice chairman of American Airlines, was named chief executive officer of TWA L.L.C., the new wholly owned subsidiary of American. Former TWA president and CEO William F. Compton will serve as president.
At Lambert Airport in St. Louis, officials and thousand of airline employees gathered Monday to celebrate with speeches and a barbecue.
Compton praised employees for keeping the airline flying during several months of bankruptcy proceedings.
”American Airlines is not just buying slots and gates and hangers, American Airlines is acquiring our greatest asset, the TWA employees,” said Compton, a former TWA pilot who still holds the rank of ”captain.”
On Friday, U.S. District Judge Sue Robinson denied a creditors’ request to delay the sale. Regulatory approval was granted Friday by the U.S. Department of Justice.
The American-TWA deal still has obstacles ahead. Leaders of American’s three unions have withheld support because they fear the difficulty of absorbing TWA’s workers could cause turmoil.
But TWA’s unions, including the International Association of Machinists and Aerospace Workers and the Air Line Pilots Association endorsed the sale to AMR.
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.
But toward the end of its storied history, TWA fell on hard times and had not posted an annual profit since 1989. The company filed for Chapter 11 bankruptcy protection three times, the latest on Jan. 10, the day the merger with American was announced.
Shares of AMR were down 5 cents to $33.92 in trading on the New York Stock Exchange.
On the Net: http://www.twa.com
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