TWA/US Airways

Sun Jan 31, 1999 5:28 am

I noted a rumor over on the Yahoo finance boards about a potential US Airways buyout of TWA.

I think this has potential to be a great fit. What do you think?


RE: TWA/US Airways

Mon Feb 01, 1999 12:09 am

Nobody will not buy nobody. US Airways has on order 400 new Airbuses. TWA has on order 50 B717 and around 100 Airbuses. Now they dont have money for enything.

Philly Phlyer
Posts: 356
Joined: Sun May 23, 1999 12:05 pm

RE: TWA/US Airways

Mon Feb 01, 1999 12:57 am

It would be a good fit from the perspective of giving US Airways a strong Midwest hub with little route overlap, however, TWA has many financial skeletons in the closet. The ticket sales agreement with Karabu (ie: Carl Icahn) is a heavy weight for any potential suitors to take on. This and some of TWA's other liabilities (including legal liabilities) have made it less attractive to US Airways or any other potential suitors.

IMHO, US Airways and others are playing a waiting game to see if TWA can iron out its union contracts (machinists and flight attendants) to keep a control on costs and, ultimately, whether it will survive. If TWA does not survive, it would be cheaper and easier (with both unions and regulators) to move in and buy up the pieces. [This is how US Airways got their Philadelphia hub, They bought the pieces of the failed Midway/Eastern hubs for pennies on the dollar. Now the Philly hub is their cash cow!] If TWA gets its cards in order and survives, then, potential suitors would weigh the costs and decide whether or not to try to buy it then.

US Airways has the cash (doesn't matter, it would be a stock swap anyway) and the aircraft orders would not stop it because many of the numbers quoted are options and, with the older fleet of DC-9s and 727s, new planes are needed.
Posts: 2
Joined: Thu May 12, 2005 4:23 pm

RE: Phor Philly Phlyer

Mon Feb 01, 1999 1:11 am

Philly Phlyer: I have heard about Carl Icahn's leadership of TWA. However, I do not know much about what happened in that era. If you know, could you explain. Thanks.
Philly Phlyer
Posts: 356
Joined: Sun May 23, 1999 12:05 pm

RE: Question on Icahn & TWA

Mon Feb 01, 1999 12:55 pm


Go to the Yahoo business news board and ask for a quote on TWA. Once there, follow the link to messages (discussion) and read through it. Some of it relates to current union negotiations and other current topics, but Icahn and his legacy come up again and again.

In a nutshell, TWA once was one of the big carriers (like PAN AM and Eastern) but made too many bad decisions in the late 60s and early 70s. [This was prior to Icahn.] It didn't know how to react to the new environment of deregulation. Believe it or not, but Robert Crandall started at TWA and jumped to American! TWA was contracting domestically while the UAs and AMRs were growing. Icahn came in and "saved" TWA from being taken over by other carriers in the 80s. It was at a very heavy cost, however, because he sold off many of the crown jewels of the carrier and raided the employee pension plans. Many of American's European routes (including Heathrow rights) were purchased from TWA. TWA also did not place any aircraft orders and got caught with an aging fleet that is expensive to maintain and that guzzles fuel.

These days, the biggest effect on TWA from Icahn is Karabu (sp?) which is the agency that he has that can sell discounted TWA tickets with no proceeds going to TWA. It came about as part of the buyout of his stock. It has the right to sell a fixed number of tickets for years to come.

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