TWA decision postponed until Monday

Airline Industry Information, March 12, 2001

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TWA Acquisition Group has increased its offer for the purchase of Trans World Airlines to USD1.1bn.

The group - backed by former TWA chairman Carl Icahn - made the offer after the TWA board of directors accepted an enhanced USD772m offer from AMR Corp, the parent company of American Airlines. The group's first offer was USD650m. Brian Freeman, the chairman of TWA Acquisition Group, stated on 9 March: 'This represents a feasible plan for a viable, stand-alone, competitive airline which would exit Chapter 11 [bankruptcy reorganisation proceedings] with cash in excess of USD350m,' The Associated Press reported.

American Airlines has claimed however that the group's improved bid was an attempt to force AMR Corp to reach a settlement over a discount ticket-purchasing contract that Icahn has with TWA, which American Airlines has said it would abandon if it is successful in merging with TWA.

Despite the new offer from TWA Acquisition Group, TWA has indicated that AMR Corp's bid is still preferred, with a spokesperson for the airline saying 'Mr Icahn's group received due consideration for their proposal, which was tardy and proved to be inadequate.'

A court hearing to decide the successful buyer of TWA was held over until 10 March, when the judge indicated that the Icahn-backed bid would not be heard because it did not meet the guidelines set out for the auction, Reuters reported. The CEO of TWA also testified on 10 March that TWA would be liquidated if it was forced to try and operate as an independent airline. During the Saturday hearing the judge further postponed a decision on the matter until today (12 March).

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