Nothing stands in way of American Airlines, TWA merger
March 18, 2001
WASHINGTON (AP) The Justice Department announced Friday it will not challenge American Airlines’ proposed acquisition of TWA, a decision that effectively retires one of most storied names in the annals of U.S. aviation.
The department’s Antitrust Division put out a brief statement saying it had decided to let the transaction go forward after investigating the merger and taking into account TWA’s bankrupt condition.
Under the proposed deal, American would pay $742 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 start-up of United and US Airways that would serve 44 markets out of Washington’s Reagan National Airport.
”We’re very pleased,” TWA spokeswoman Chris Kelly said. ”It’s a major step forward. We’re looking forward to closing the transaction quickly.”
Just this week the CEO of TWA told a federal bankruptcy court he would be forced to liquidate his carrier if a sale for most of its assets to AMR Corp.’s American Airlines was not approved.
American’s bid includes the assumption of $3.5 billion in aircraft leases. It was announced in principle Jan. 10 the same day that TWA filed for bankruptcy for the third time in less than a decade. The timetable for closing the deal is early April.
The deal will reshape the industry. TWA, which traces its roots to the 1925 founding of Western Air Express, once catered to popes and movie stars and was owned at one time by Howard Hughes.
It held the world’s attention during a 1985 hijacking in Beirut and the 1996 crash of a flight from New York to Paris.
But the airline hasn’t turned a profit since 1988 and has filed for bankruptcy twice before.
It lost $115.1 million in the first nine months of 2000 and $353 million in 1999. TWA said an increase in oil prices pushed it into bankruptcy this time.
Accounting for TWA’s business, the new American would control 22.6 percent of the airline market, congressional investigators have estimated.
TWA has 20,000 employees, and American officials have said that American would offer jobs to all 17,600 unionized workers, including about 2,300 pilots.