TWA Selects American Airlines' Bid
By DAVID SCOTT
Associated Press Writer
ST. LOUIS (AP) -- The board of Trans World Airlines Inc. selected a sweetened $742 million offer from AMR Corp [NYSE:AAR - news].'s American Airlines as its preferred bid on Wednesday and will recommend it to a federal bankruptcy court.
The final decision still rests with U.S. Bankruptcy Judge Peter Walsh, who will consider several other offers during a sale hearing on Friday in Wilmington, Del.
``I'm not going to handicap what Judge Walsh will do,'' said TWA spokesman Mark Abels. ``We feel that the American offer is the highest and best offer.''
Among the offers rejected by TWA's board of directors was one worth $650 million from its former owner, financier Carl Icahn, whose dealings with TWA workers were acrimonious. The others were essentially dismissed by TWA for not following the rules of the bidding process established by the bankruptcy court.
At the bankruptcy court hearing on Friday the spurred bidders will have a chance to object and present their bids to the court.
It's possible Walsh could rule from the bench at Friday's hearing, meaning TWA -- the longest flying carrier in American commercial aviation -- could have a new owner in place by week's end.
American announced its initial bid of $500 million, plus the assumption of $3.5 billion in debt and lease obligations, on Jan. 10 -- the same day the St. Louis-based carrier filed for bankruptcy.
At the request of TWA, American increase its bid Wednesday afternoon by $242 million. TWA said the increased offer will help it pay off a larger portion of its debts.
The bid backed by Icahn, who attended the auction Wednesday when TWA selected the American offer, was filed Monday, several days after the Feb. 28 deadline set by the court.
Abels said the Icahn bid contained several conditions that led the airline's board to reject it. Most notably, it required TWA's two unions to agree to concessions, an unlikely prospect considering both refuse to have any dealings with Icahn or his associates.
The other two bidders making offers for substantially all of TWA's assets failed to provide the $50 million in ``good-faith'' financing required by the court.
That includes Jet Acquisitions Group of Arizona, which offered $889 million but never came through on several promises that it would make the required deposit.
Abels said Jet Acquisitions asked TWA to provide a letter its bank could use to demonstrate that financing was in place. The letter was provided and never returned, Abels said.
The TWA board also rejected a $220 million bid from Rosemont, Ill.-based Galileo International for the airline's 26 percent share of Worldspan, a travel reservation service.
TWA has asked Walsh to approve a $125 million increase in what is known as debtor-in-possession financing -- basically a loan that allows TWA to continue operations as the bankruptcy progresses.
TWA, which has already been provided with $200 million in debtor financing by American, wants the additional money primarily to pay off aircraft lease payments that are coming due.
If American's offer is selected by the court, the Texas-based airline will pay TWA $742 million in cash, minus whatever amount of debtor financing TWA has used.
My take: Jet Acquisitions Group -- the biggest joke in the airline industry.