okay...this is the REAL story and this is exactly how it goes. I will start with a brief history to blend into the Karabu agreement.
...Employee moral, and consequently customer service, suffered. In 1991, Icahn sold soem of TWA's flagship Trans Atlantic routes to American Airlines, in a single sweep of the pen giving up the priceless rights at London-Heathrow. While it may have put cash in his pocket, it was a humiliating retreat for the employees who saw the company grow from Ford Tri-motors to flying the US flg around the world. According to Compton, heathrow flights were the most important part of TWA's operation. Icahn sold them for $445 Million, and TWA was getting $500 million in revenue from them.The year after Icahn sold heathrow, revenue went down by $1 Billion.
Icahn was finially outest from the broken shell of a company he promised to save but he exacted a higher price for leaving. In June, 1995, as TWA was about to declare bankruptcy for the second time, Icahn realized it would default on a loan he had gauranteed when he was chairman. He negotiated a payout in tickets through one of his companies, Karabou INc. Simply put, Icahn recieved the right for karabou to pay only 55% of any TWA published fare, except for passesngers having St louis as an origin or destination. Thus if TWA introduces a promotional fare of $100, Karabou can sweep in and buy as many tickets as it likes for $55, then sell them direct to the public for $75. Icahn maked $20 per ticket with no risk, TWA's yield is devastated, the passenger pays $75 to Karabou when they would have payed $100 to TWA. One industry analyst estimates that TWA is losing $150 million a year to Karabou Tickets.
Now you know the truth. If anyone has any questions or coments please e-mail me for any info on TWA you may have. my e-mail address is PropilotJW@aol.com