United Airline
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AA Becomes The World's Largest Airline. How Long?

Tue Apr 10, 2001 7:46 pm


Combination Will Offer Greater Service to CustomersAnd Create New Job Opportunities

Business as Usual During Transition for TWA Employees, Passengers and Ticketholders

FORT WORTH, Texas – A new era in aviation history began today as American Airlines successfully completed its acquisition of most of the assets of Trans World Airlines, Inc. The combined company will offer travel to more than 300 cities worldwide on more than 900 aircraft, with an expanded and more convenient flight schedule.

Effective today, TWA will be operated by TWA Airlines LLC, a wholly owned subsidiary of American Airlines. In the near term, the two airlines will operate independently, including separate reservations systems, payroll systems, aircraft, procedures and policies. TWA employees, passengers and ticketholders will enjoy business as usual during the transition period. Following the transition period, TWA LLC will be fully integrated into American’s operations. Robert W. Baker, vice chairman of American Airlines, will assume the role of CEO of TWA LLC, and former TWA President and Chief Executive Officer Captain William F. Compton will serve as president.

Donald J. Carty, chairman and CEO of American Airlines, said, "Today, we celebrate a true milestone for the employees and customers of both American Airlines and TWA. The combination marks the beginning of a new era in aviation, as we bring together some of the most valuable assets and some of the best people in the industry.

The groundbreaking airline we are creating today will offer expanded service to customers and increased opportunity for employees, and will provide significant value to American Airlines shareholders."

Robert W. Baker said, "I am delighted to welcome TWA employees to the American family, and I look forward to working with Bill Compton to ensure a smooth transition. While we still have a lot of operational details to work out, I am extremely excited by the opportunity to bring together two of the industry’s best workforces and to begin to deliver benefits to our customers. It is important to emphasize that, for now, TWA passengers and ticketholders should expect no changes. TWA reservations centers, ticketing procedures, most Aviators policies and most Ambassador Clubs will continue to operate as normal. We’ll provide ample notice of any changes that will affect passengers."

Captain William F. Compton added, "Today marks the beginning of the next chapter in TWA’s storied history. I have known and admired American’s management team for many years, and I look forward to working with them to build a prosperous future for American Airlines. Significantly, this transaction ensures a continued presence in the communities TWA serves and continued opportunities for TWA employees."

American Airlines announced earlier this year that it had agreed to purchase substantially all the assets of Trans World Airlines, Inc. through a U.S. Bankruptcy Court proceeding for approximately $625 million in cash and the assumption of aircraft operating leases.

American Airlines, Inc.

American Airlines and its regional airline affiliate, American Eagle Airlines, together serve more than 240 cities in 49 countries and operate approximately 4,100 daily flights. American Airlines, which traces its beginnings to 1926, today operates a fleet of 720 modern jetliners and employs more than 103,000 people worldwide. American Airlines and American Eagle are both wholly owned by AMR Corp. (NYSE: AMR).

# # #

Contact Media Relations

Copyright © 2001 American Airlines, Inc. All Rights Reserved.

I personally think that this will boost the UA/US merger. If AA and TW are allowed to merge, why not UA and US? I am sure this will increase competition in a certain extent. At least two giants competing against each other.

It is sad to see TWA leaving us though. How much longer for TWA?

All ideas are welcome!

United Airline
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RE: AA Becomes The World's Largest Airline. How Long?

Wed Apr 11, 2001 2:59 pm

Well, better off having facts to back my posts up.  Smile

United Airline
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RE: AA Becomes The World's Largest Airline. How Long?

Wed Apr 11, 2001 3:44 pm

Additional Press:

American now world’s largest airline

AMR completes $742 million TWA purchase
AMR Corp., the parent company of American Airlines, bought the assets to bankrupt TWA on Monday.


FORT WORTH, Texas, April 9 — American Airlines became the world largest air carrier and grounded a venerable competitor Monday after acquiring the assets of bankrupt Trans World Airlines. The deal, which closes the books on the longest-flying carrier in American commercial aviation, was completed following a day of legal maneuvering capped by a federal judge refusal to grant a stay that would have blocked the deal.

“TODAY WE CELEBRATE a true milestone for the employees and customers of both American Airlines and TWA. The combination marks the beginning of a new era in aviation, as we bring together some of the most valuable assets and some of the best people in the industry,” said Donald J. Carty, chairman and chief executive of American Airlines.

American, the No. 2 carrier before the deal, swaps positions with No. 1 United Airlines in terms of revenue passenger miles. The combined company will offer travel to more 300 cities worldwide on more than 900 aircraft.

American’s newfound supremacy could be short-lived, though. The airlines will reverse positions again if United succeeds in its bid to obtain most of US Airways.

For now, customers should see no differences as the airlines will operate independently, with separate reservation systems, payrolls, aircraft and policies. TWA eventually will be integrated fully into American’s operations, though it was not clear how long the transition period would last.

“These companies have very similar roots,” Carty said. “Certainly, in the most recent decade or so, American has been much more successful than TWA. But in the first 50 years of the two carriers’ operation, these were very similar airlines with very similar histories and very similar cultures.”

TWA, based in St. Louis, was formed in 1930 from the merger of Western Air Express and Transcontinental Air Transport. That year, the combined company became the first airline to offer coast-to-coast air service.

Movie mogul Howard Hughes once owned a controlling interest in TWA. In its prime, TWA was the airline of choice for the rich and famous.

But TWA had not posted an annual profit since 1989. Three years later, it filed for Chapter 11 bankruptcy protection, the first of three times it would do so. The last was on Jan. 10, the day the deal with American was announced.

“Unfortunately, the industry just kind of passed them by,” said Robert Milmore, an analyst at Arnhold and Bleichroeder in New York. “It’s sad to see the tradition of what once was; on the other hand, I think it’s much better that they’re now aligned with a much stronger carrier.”

A federal appeals court cleared the way Monday for the sale, denying a last-minute bid by a group of Israeli TWA workers to stop the transaction. The Jewish Labor Federation, which represents about 100 Israeli TWA employees and retirees, wanted the appeals court to send the case back to federal bankruptcy court for more consideration, said Bruce Zabarauskas, the lawyer representing the workers.

Fort Worth, Texas-based AMR Corp.’s deal to pay $742 million for the airline, plus the assumption of $3.5 billion in debt, does not include funds for TWA’s unsecured creditors. The Israeli workers are unsecured creditors owed about $18 million in salaries and benefits, Zabarauskas said.

On Friday, U.S. District Judge Sue Robinson denied the creditors’ request to delay the sale, including a protest by former TWA owner Carl Icahn. Regulatory approval was granted Friday by the U.S. Department of Justice.

Analysts said American pursued TWA to add the centrally located St. Louis hub to its network and ease delays at crowded Chicago O’Hare and Dallas-Fort Worth International airports.

At Lambert Airport in St. Louis, officials and thousands of airline employees gathered Monday to celebrate the deal’s pending completion with speeches and a barbecue.

Robert W. Baker, vice chairman of American Airlines, was named chief executive officer of TWA L.L.C., the new, wholly owned subsidiary of American. Former TWA president and CEO William F. Compton will serve as president.

“American Airlines is not just buying slots and gates and hangers. American Airlines is acquiring our greatest asset, the TWA employees,” said Compton, a former TWA pilot who still holds the rank of “captain.”

The new company still faces several challenges. Leaders of American’s three unions are withholding support for the purchase because they fear the difficulty of absorbing TWA’s workers could cause turmoil.

“We’ve made no secret of our preference for internal growth rather than growth from acquisition,” said Gregg Overman, spokesman for the Allied Pilots Association, which represents American’s pilots. “That noted, our focus now is on securing a favorable agreement with AMR management covering this acquisition and on working through the integration issue with the TWA pilots.”

But TWA’s unions, including the International Association of Machinists and Aerospace Workers the Air Line Pilots Association have agreed to the sale to AMR.

U.S. Circuit Judge Samuel Alito also ruled Monday that a section of the sale agreement dealing with AMR’s responsibility for discrimination claims against TWA will not take effect for now.

Shares of AMR fell 5 cents to $33.92 in trading on the New York Stock Exchange.

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RE: AA Becomes The World's Largest Airline. How Long?

Wed Apr 11, 2001 6:57 pm

The UA/US merger is in doldrums. There is a newsmagazine that is publishing
an article to that effect (I forget which, just heard it somewhere)

So maybe AA will be the biggest for quite sometime  Wink/being sarcastic
United Airline
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RE: AA Becomes The World's Largest Airline. How Long?

Wed Apr 11, 2001 7:01 pm

I think the UA-US Merger will go through. Probably before 1/2002.

Just my 2 cents.
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RE: AA Becomes The World's Largest Airline. How Long?

Wed Apr 11, 2001 9:21 pm

You have to remember American Eagle is a 100% subsidiary of AA. So when you count AA´s planes, always count American Eagle as well, unlike other carriers´ feeders which are only partly owned or independant franchisees. So AA was, is and will be the world´s largest airline in terms of number of planes.

(Sorry if someone else already said that, I have "Show full replies" disabled.)

Daniel Smile
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RE: AA Becomes The World's Largest Airline. How Long?

Thu Apr 12, 2001 3:34 am

UA-US is in doldrums as NYCank says and will likely be canned. UA-US and AA-TW are very different critters. TW was dying right now, so it was either buyout or shutdown. Only AA came through with a serious offer. US Airways has several very solid years left in it, despite Stephen Wolf's noisy disinformation the contrary. US Airways is not even in danger let alone dying. I don't buy for a minute that US lost $269 mil last year as he claims; traffic was too strong and low-fare competition (again, despite Wolf disinformation to contrary) simply isn't that substantial yet in NE. Wolf pays the accountants.

Also, one needs to look at industry structure. AA-TW puts AA just over 22 percent of USA market, just a half-percent above United's share right now. AA-TW was thus not big enough to trigger superconsolidation, and DOJ correctly recognized that. (Despite Don Carty's brilliant scheme to enmesh AA-TW in UA US with separate transactions, to save UA-US, which looks like it's not going to work.)

UA-US would give UA over 27 percent of USA market, and that *would* trigger superconsolidation. All that DL-CO talk of merging died down after it became clear that Justice was not going to equate AA-TW with UA-US. (ISn't it amazing how fast a merger that doesn't threaten to create nationwide consumer hell can sail through the supposedly slow DOJ?).

The Big 6-Cartel carriers have treated the public abusively for ten years after the *last* time they consolidated. Been there, done that, folks. There's a record here. They need to clean up their service act and lower their airfares at medium and small size cities before they can expect to be allowed to consolidate down to Big Three.

Need a new airline paint scheme? Better call Saul! (Bass that is)

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