Wilmington, Del. — The CEO of Trans World Airlines told a federal bankruptcy court Saturday that he will be forced to liquidate his carrier if a sale for most of its assets to AMR Corp.'s American Airlines is not approved.
William Compton, a former TWA pilot who still holds the title of captain, said such a liquidation could come "very quickly."
The board of Trans World Airlines Inc. selected a sweetened $742 million offer from American Airlines' parent corporation as its preferred bid to take over the bankrupt airline.
"My belief is the transaction with American provides the best outcome for all of us," Compton said during three hours of testimony. "We believe the American Airlines deal is the catch of the hail Mary."
That bid, worth $742 million plus the assumption of $3.5 billion in aircraft leases, was announced in principle Jan. 10 the same day TWA filed for bankruptcy for the third time in less than a decade.
U.S. Bankruptcy Judge Peter Walsh will select a bid on Monday. He said he wanted an extra day to allow attorneys involved in the case to finish negotiations on side issues and prepare concise final arguments.
"It will give me an opportunity to organize my thoughts on these issues," Walsh said.
Despite the desperate picture of TWA's financials painted by Compton, a spokesman for the airline said nothing has been done to prepare consumers or employees for a potential liquidation. Mark Abels, the airline's vice president of corporate communications, said the public shouldn't be worried about TWA not flying on Monday.
"That's not an issue. We're not preparing to shut down," Abels said.
During testimony Friday, TWA chief financial officer Michael Palumbo asked Walsh to approve a $130 million loan from American to keep TWA's planes flying next week.
Palumbo said that without the loan, creditors who hold the leases for most of TWA's jets could move to seize the planes.
Walsh has already hinted he'll accept American's offer, which he described as the only valid proposal during Friday's portion of the sale hearing. TWA attorneys told the court it was the only bid submitted by a Feb. 28 deadline that conformed to court established bidding rules an assertion Walsh agreed with.
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