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Icahn To Sue AMR Corp. (Barf Alert)

Fri Jan 12, 2001 1:20 pm

AMR Facing Suit Over TWA Ticket Agreement, Icahn's Lawyer Says

Wilmington, Delaware, Jan. 11 (Bloomberg) -- Former Trans World Airlines Inc. Chairman Carl Icahn is preparing to sue AMR Corp., claiming AMR is using it planned buyout of TWA to dump an agreement that gives Icahn access to discounted airline tickets, a lawyer for Icahn said.

New York attorney Edward Weisfelner said he is preparing a contract-interference claim after learning yesterday that AMR won't pick up the tab for TWA's ticket agreement with Icahn's Karabu Corp. AMR agreed to pay $4 billion to buy TWA's assets and assume its debts as part of a bankruptcy reorganization. Weisfelner is representing Icahn in TWA's Chapter 11 case.

As part of an earlier TWA bankruptcy filing, Icahn agreed to extend the payment deadline on $197 million in loans to TWA in exchange for the right to buy more than $610 million in cut-rate TWA tickets. Icahn sells the tickets on his Lowestfare.com Web site. He stepped down as TWA chairman in 1993.

``The damages here are astronomical -- in the multi-billions of dollars,'' Weisfelner said.

AMR officials wouldn't discuss the case. ``If somebody sues us, we never comment on pending legal actions,'' said company spokeswoman Martha Pantin.

The lawsuit may be an opening jab in a legal fight between Icahn and AMR over TWA, which filed for protection from creditors in U.S. Bankruptcy Court in Wilmington, Delaware, yesterday. It is the third time in a decade that TWA has filed for Chapter 11 protection.

Purchase Agreement

Under an agreement that must be approved by a judge, American would buy TWA property and pick up lease agreements on its planes. American said it would hire TWA's 20,000 workers and provide $200 million in immediate financing for the 75-year-old carrier.

At a hearing yesterday, Weisfelner asked U.S. District Judge Sue Robinson to reject AMR's bid. Icahn, the billionaire corporate raider, should be allowed to offer his own financing package, Weisfelner said.

Icahn and his allies could provide better financing terms than American, Weisfelner said, according to TWA lawyers. Robinson brushed aside Icahn's offer and let AMR's financing plan go forward, the lawyers said.

TWA officials will consider competing bids for the airline until March 1, according to court papers.

Weisfelner said Icahn is mulling whether to join with TWA's unions and plane owners to make an offer for his old airline. Icahn took over St. Louis-based TWA in 1985 and eventually led the company into a Chapter 11 filing in 1992.

``It would be his second time around,'' Weisfelner said. ``But they've modernized the fleet and we're in a different labor environment.''

Icahn's Influence

Even if he doesn't make a bid, Icahn is likely to have influence over TWA's bankruptcy case. Icahn holds about $56 million in TWA bonds, Weisfelner said.

Icahn has a reputation for playing hardball once he jumps into a high-profile bankruptcy case. In 1997, he led Marvel Entertainment Group bondholders in a bid to wrest control of the world's largest comic book publisher from Ronald Perelman.

Icahn and bondholders won control of Marvel in a court fight only to have a judge take it away again by appointing a trustee to oversee the company's operation. Marvel later emerged from bankruptcy as part of Toy Biz Inc. Weisfelner represented Icahn in the Marvel case.

TWA's lawyers are preparing to counter potential objections from Icahn and other bondholders about bonuses the airline is offering executives who agree to stay with the company during the bankruptcy case.

TWA wants to create a $15 million bonus pool to give executives an incentive to stay until the sale to AMR is completed. TWA officials are hoping the transaction will close by the end of May.

AMR shares fell 25 cents to $38.44 today. The Fort Worth, Texas-based owner of American Airlines has seen its shares rise 31 percent in the past year.

Jan/11/2001 21:43 ET

For more stories from Bloomberg News, click here.

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RE: Icahn To Sue AMR Corp. (Barf Alert)

Fri Jan 12, 2001 2:01 pm

Icahn is scum.

Fortunately virtually everybody realizes this (including the bankruptcy judge).

Sorry, Carl. This isn't a tiny company you're trying to push around. AA can afford more (and better) lawyers than you can.

And what's with this -- "Weisfelner said Icahn is mulling whether to join with TWA's unions and plane owners to make an offer for his old airline."

Does anybody here really think that ANY of TWA's unions would join forces with Carl Icahn???? That's one of the funniest things I've read.

Oh well. Hopefully Icahn will spend his money fighting AA. He will lose, of course, and be millions of dollars poorer. That makes me feel a little better...
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RE: Icahn To Sue AMR Corp. (Barf Alert)

Fri Jan 12, 2001 2:58 pm

I can imagine George W Bush along with Don CAArty breaking down Carl Ichan's door and shooting Ichan for messing with their airline. While they're physically tormenting him Bush will shout at him "Don't mess with Texas!!!!" Then Carty will ruff Ichan up some more and Tell him to kiss his AAss. If you think thats bad then imagine on what Robert CrAAndle would do to Ichan's hide once he gets ahold on what's left   It would really suck to be Ichan to really anger CAArty, CrAAndle and Bush. I guess Ichan has some sort of a deathwish.

P.s After CrAAndle gets through imagine on what the AMR lawyers would do other than crucify him or on what's left.
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RE: Icahn To Sue AMR Corp. (Barf Alert)

Sat Jan 13, 2001 8:00 am

Does Icahn really need any more money?? he is a billionaire who has put an airline out of business, now he is going to sue American Airlines. George W. and Don Carty and Bob Crandall(possibly) will kick is @ss! George W. will probably say no!(and he is the president of this country in about a week!) AA will end up sueing him!
VirginA340:You are exactly right!
And no one and I mean no one messes with texas!(no one can mess with me because I live in Dallas!) I also live very close to CrAAndall too(he is in my neighborhood). He has a very modern house(on the outside) I haven't been in though! It will soon be better as he will have more Carl's money!
In all seriousness: Does Carl Icahn really need more money? After all, he is a multibillionaire.
Give me a break, I created this username when I was a kid...
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RE: Icahn To Sue AMR Corp. (Barf Alert)

Sat Jan 13, 2001 8:08 am

NO WAY would the unions even consider joining with Icahn to take over TWA. That is pure nonsense. First of all, the unions HATE Icahn. Secondly, why in the hell would the unions want to own part of a financially unstable airline and continue the struggle of trying to make it successful when they're guaranteed better wages and a successful airline once the AMR transaction is complete in a mere few weeks? That was just Icahn's lawyer talking out of his ass.
An unexamined life isn't worth living.

RE: Icahn To Sue AMR Corp. (Barf Alert)

Sat Jan 13, 2001 8:17 am

Carl Ichan, Frank Lorenzo and Satan... All graduates of the same school of airline management. I wouldn't be suprised if Carl eats newborn babies and has sexual relations with sheep.
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RE: Icahn To Sue AMR Corp. (Barf Alert)

Sat Jan 13, 2001 8:18 am

An open letter to Carl Icahn:


You're already a multi-billionaire, and between your poor management of TW, the idiotic decision to sell TW's LHR rights to AA for a song, and your leech-like Karabu scheme, no wonder TW is forced to merge with AA in order to save itself.

The bankruptcy judge already knows full well how you ran TWA into the ground; the judge will NEVER allow you to take over TWA again. Besides, AA has a team of very powerful lawyers, and they also have a friend in the White House (say hello to "Dubya"   ) that will ensure you won't get control of TW again.
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RE: Icahn To Sue AMR Corp. (Barf Alert)

Sat Jan 13, 2001 8:23 am

Icahn doesn't have a chance against CAArty, George DubyAA.
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RE: Icahn To Sue AMR Corp. (Barf Alert)

Sat Jan 13, 2001 12:25 pm

Carl Icahn is to blame for TWA's demise. He should never have been permitted to run an airline. All he
succeeded in doing is siphoning off funds that
could have been renivested in the airline and selling
its prized assets.

The employees of TWA should file a lawsuit against
Mr. Icahn. Furthermore, in the interest of those
20,000 dedicated employees who tried to make TW
work, the DoJ should clear this deal quickly and


RE: Icahn To Sue AMR Corp. (Barf Alert)

Sat Jan 13, 2001 1:37 pm

Atrpilot: I found your comment regarding Ichan "eat(ing) newborn babies" disgusting, racist, and completely inapropriate. In the context of how that allegation has been used in the past against a people Mr. Ichan happens to be a member of, I ask that you apologise and refrain talking with such repugnance on this board again.

Thank you.

I also want to say to everyone else, what makes you think 1) AMR's lawyers are better than Ican 2) Why George Bush will come out swinging for airline consolidation in a scoeity so aware of significant anti-trust issues.

No offense to anyone, but I believe that all of the above posters have let their emotions and not their brains dictate their above posts.

1) If AMR has such a top flight legal team why are they and have they had such difficulty in so many legal issues? They have significant labor troubles, pilots staging work outages, disrupting the airline following past mergers, they are now being threatened by their fligth attendants, they are being investigated by the DoJ for muscleing out Western Pacific and Vanguard from Dallas, and most significantly of all they failed in their legal recourse from barring Legend Airlines from begining operations at Love. Who would have though tiny L7 would have prevailed in that suit? You guys are completely understimating Ichan, how clever he may be, he is still one of the country's richest and shrewedest entrepreneurs whose decisions in the past and still some today, ruffle Boards of Directors around the world. Sorry guys but he's no small potatos.

Number 2, but George W Bush has a ton more to worry about right now than coming out strongly for further anti-competitive business consolidation. His first choice for Labor secretary is out, his choice from Attorney General is far from certain, and his new Defense Chief is proposing spending like a billion dollars even before next years budget on building some whacko space missile antimissle defense network system. On top of that, Bush is out there telling the Wall Street Journal that the economy is headed for the dump.

So while its all easy to say, yeah Dubya will help him out and this Ichan doesn't know who he's dealing with etc... etc..., I think you are all wrong.

No offense intended at all.

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RE: Icahn To Sue AMR Corp. (Barf Alert)

Sat Jan 13, 2001 2:06 pm

Icahn is posturing for a sweet out of court settlement, which he'll get, and then he'll go away. He has no interest in the airline business, unlike most other executives in the industry - he's just trying to "protect" his interest.

It's all part of the dance.
My wife can't wrestle, but you should see her box.
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Icahn's Got A Nice Little Scam Going

Sat Jan 13, 2001 3:12 pm

I never knew he was Lowestfare.com. Now I know their business model - buy TWA tickets at 55 cents on the dollar and sell them at 75 cents on the dollar. That sounds like a deal Tony Soprano would've figured out.

RE: Icahn To Sue AMR Corp. (Barf Alert)

Sat Jan 13, 2001 3:21 pm


I think there are a few other CEO's out there who don't give a rat's @$$ about the airline biz, but rather to make money, money, $$$$$
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RE: Icahn To Sue AMR Corp. (Barf Alert)

Sat Jan 13, 2001 3:41 pm

TWAneedsNOhelp; You need help along with your airline. Your name is a bad omen and We are the least of your worries considering that your airline is under it's 3rd bankruptcy with no possible way of recovering. I can't belive the audacity that you're defending the punk that nearly liquidated your "favorite" airline. Of all the dumbest things I've seen in the aviation biz is Ichan selling the biggest money making thing TW had and that was the LHR authority. This was probably the only chane that TW had of remaining a world class airline. But that oportunity went to hell. As well as the airline slowely dying from a disease called Karabu that prevented TWA from making a huge profit with other carriers. If you really care about TWA than why in hell would you come up with an idiotic name like that? Almost every employee that worked under the Ichan era hates his guts. George W will get involved considering that the DOJ is now under the Bush Administration and AA has been supprting Bush since the Primary such as contributing to his campainge in being President. George Bush SR and JR do have close ties with AA. Russell; As far as I'm concerned The way TW is going They're stuck between a AA and Ichan. For the sake of the employees TW had better go to AA instead of being screwed over again by the devil himself. I had close relatives who onced worked with TWA at LHR and JFK but either lost their jobs after dedicating years of their precious lives to a company they thought would look out for them or retired early because of that prick. So why don't you respect our opinions and think on why just about every TW employees hates his guts. As I recall I had heard from an ex TWA pilot who retired early due to Ichan's schemes. Now he and many retired TWA employees are worried about their pensions because TW might not be able to keep up with the payments. I hope that they will not be left behind. They've been the hardest hit by Ichan's wrath and have been jerked around too much for too long to have anything else happen to them. If Ichan didn't mess everything up than TW would probably be bigger than UAL
Tan Flyr
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RE: Icahn To Sue AMR Corp. (Barf Alert)

Sat Jan 13, 2001 11:47 pm

Russell, Most of the time you post well thought out items on here, but this one caught me wondering if you drank something bad.
These guys were just spouting off on here about a businessman that gives 99% of us in business a bad name. As far as the eating babies remark that atrpilot made...he was just drawing an analogy. An example...as a parent when your kids drive you crazy you might make a remark about wild animals that eat their own babies.

So, to Ichan....this is just another example of greenmail. maybe it will work, maybe not.I hope not.

Just a thought to share here...I really get a kick from many of the threads(posts) you younger guys put on here. Some well thought out..some not..most have something to think about.

Many years of business experience has taught me that, IN THE END, greed(like Ichans) will come up and bite you in the ass. trust me guys, He WILL get his.

Have a great weekend!
ATL Traveller
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RE: Icahn To Sue AMR Corp. (Barf Alert)

Sun Jan 14, 2001 1:47 am

Eating newborn babies is racist?
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RE: Icahn To Sue AMR Corp. (Barf Alert)

Sun Jan 14, 2001 1:53 am

Carl Icahn is to blame for TWA's demise. He should never have been permitted to run an airline. All he
succeeded in doing is siphoning off funds that
could have been renivested in the airline and selling
its prized assets.

Unfortunately at the time the choice was between Ichan and Frank Lorenzo. Talk about a lose-lose situation...

The customer isn't a moron, she is your wife -David Ogilvy

RE: Icahn To Sue AMR Corp. (Barf Alert)

Sun Jan 14, 2001 7:04 am


I hope you are working for Icahn, because your message could be a sign of how much Icahn himself underestimates AA's power in the market and its connections to the Presidency and to political power in general.

So, leaving aside for the moment why anyone who is an advocate of TWA would want to defend Icahn, let me say that AA's ability to extract a $45 million payment from its pilots for an illegal job action is all the evidence one needs of their legal prowess. Until AA did this, no other airline had thought of taking its pilots to court to force them to honor the terms of their contract. Do you think Delta or United would have had the idea to take their pilots and mechanics to court respectively if American's legal arguments hadn't been so successful? The net result of that legal action is that American not only chastened its pilots, but was adwarded a financial settlement that makes it virtually impossible for the union to take any wildcat action in the near future.

As for the Legend Air situation, I think you fail to recognize the dual purpose of AA's legal actions. AA's legal argument that a local contract signed by the municipalities of ForthWorth and Dallas should supercede a federal decision to open up Love Field was not in of itself without its merits. In fact, I was quite surprized when the schizophrenic US Supreme Court did not pursue the case any further, because to no small extent the decision by the DOT created a conflict between the rights of the federal government and that of an agent of the state. Still, AA was not set back when it lost the case; by forcing the issue in fact it caused Legend to spend a significant portion of its start-up capital on lawyers instead of planes. In time, the shortfall in capital led to Legend's bankruptcy.

Some problems, however, cannot be solved through the courts or through the pursuit of legal protections. One example of this would be the predatory pricing case that the Clinton DOJ has filed against American. Though American has been prepared to defend itself against the DOJ's flawed argument, it looks like they will not have to. No one other than Holly Hegeman at planebusiness.com thinks that a BUSH DOJ will find a very subtle way of dropping the case against Texas-based carrier American Airlines. The writing was already on the wall last summer when a very high-placed advisor to the Bush Campaign mentioned both the AA case and the Microsoft case in the context of saying that the Clinton DOJ had over the last four years suggested that it was criminal to be successful.

If I needed any further proof that the Bush Administration will be looking out for American during the next four years, then the television pictures of Bush getting on and off an AA 737-800 would have been enough for me until I heard just this week that AA donated $100,000 to the Bush Inaugural committee.

But, really, I don't think that Bush will get his hands dirty by getting involved with Icahn himself. AA has already made a tremendous political and legal case for its takeover of TWA's assets. Keeping all of the union employees was one political coup de grace, considering the fact that the minority speaker of the House, A Democrat, and the nominee for Attorney General, a Republican, are both from Missouri. Even if Ashcroft doesn't get confirmed, Gephardt remains the political point man on this deal.

From a legal standpoint, some of what American is trying to do in bankruptcy court, I admit, is very clever, but for once it doesn't matter if American's legal arguments are not that strong, since it will have the support of TWA's biggest secured creditors, Boeing and the other leasing companies. That is why everyone on this board nearly choked when they heard Icahn's lawyer say that Icahn was near to reaching an agreement with TWA's unions and plane lessors to take over the company himself. How pathetic! Like Boeing would even answer the phone, knowing that it could mean the end of its relationship with American. Boeing's support of the deal ensures that American's A300's will become Boeing 767's.

Then, one really has to wonder what the bankruptcy judge thinks of Icahn himself or herself. How could he or she not know what Icahn's previous history with the airline has been? Do you really think he or she would sacrifice the jobs of 20,000 employess, so that the contract of a single creditor will be preserved? If it were any other creditor without Icahn's history, I would say that he or she had a chance, since bankruptcy proceeding are supposed to put the interests of the creditors above those of the employees. But, in this case, we are not dealing with just any creditor and American knew that going in. So, they need do nothing more than treat Icahn like the boy who cried wolf too many times.
Tan Flyr
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RE: Icahn To Sue AMR Corp. (Barf Alert)

Sun Jan 14, 2001 11:33 am

well put Ladevale.
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RE: Icahn To Sue AMR Corp. (Barf Alert)

Sun Jan 14, 2001 11:46 am

Hey people can change. i am not picking up for Ichan but you never know. Sure he is not to pleased that AMR will not go along with his ticketing thing but who wouldn't be? he makes a MOTHER LOAD of money from this.
I can see that this is going to become a very nasty court battle and Ichan is going to walk away with something that really works in his favour and not AMR's. Just my two cents worth.
Also i have to agree that AMR has had its trouble with unions. Look back at the pilot work stopage?!?! Hmm what was up with that? Then that mess with Reno air and their pilots and seniority issues. I don;t think that this is going to be a really smooth takeover. Again I think that Ichan will make a big fuss and the unions are going to kick up a HUGE stink!! We will just have to wait and see.

Safety is Everyones Responsibility.
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RE: Icahn To Sue AMR Corp. (Barf Alert)

Sun Jan 14, 2001 1:11 pm

I understand that Icahn has a formidable legal team. He plays hardball. But I also think that anybody who understands the history of TWA will realize that they wouldn't be in bankruptcy court if he hadn't led them down that road.

Do you realize that he's been sucking 25% of their gross income right off the top for several years.

Keep in mind that in a bankruptcy court, some creditors will win, and some will lose. Since he has gotten back a considerable return on his investment, I believe that a judge will rule that other creditors deserve a bigger share of the payments.

But I'm not a lawyer nor a judge.
User avatar
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RE: Icahn To Sue AMR Corp. (Barf Alert)

Sun Jan 14, 2001 3:30 pm

Carl Ichan ran TWA into the ground during his tenure.He is the one who sold TWA's LHR landing slots.I hope AMR kicks him to the curb,where he belongs.....

Champagne For My Real Friends,and Real Pain For My Sham Friends

RE: Icahn To Sue AMR Corp. (Barf Alert)

Mon Jan 15, 2001 7:21 am

Thanks United_Fan for reminding us of that. I was pretty sure it was Amelia Earheardt who sold TW's LHR authorities. Some people say it was Juan Trippe. These people are wrong.  

Listen, I'm a big fan of TWA, which is plainly evident if you read any of my posts on this board (thanks for the comp. Tan Flyr). Nevertheless, I was merely bringing up a few interesting points that some of our junior members may have forgotten before they wrote this thread's earlier posts (AMR wil eat Ichan for lunch....Ichan's AAs is grAAs, etc....). While not defending Ichan, I was only bringing up several relevant and honest points. I thank Ladevale for his insightful thoughts on the matter versus VirginA340's meanignless drivle abotu my user handle.

Matt D
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RE: Icahn To Sue AMR Corp. (Barf Alert)

Mon Jan 15, 2001 7:45 am

As sick as this sounds, I'm happy because it buys me a little extra time to plan my trip to STL to get a final photo shoot of TWA before they vanish.
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RE: Icahn To Sue AMR Corp. (Barf Alert)

Mon Jan 15, 2001 10:51 am

Russell; Maybe if you took your time to read the rest of my post you would see that I didn't dedicate my entire post to bash your user name. Lay off the bad crack.
You have yourself a nice day  

RE: Icahn To Sue AMR Corp. (Barf Alert)

Mon Jan 15, 2001 2:01 pm

assassinate icahn
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Maybe Icahn And AA Deserve Each Other In Hell...

Mon Jan 15, 2001 2:07 pm

I sure nobody at CO finds out that Dubya's got a bias toward AA otherwise his reputation in Houston will be shot....

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