Wilmington, Del — American Airlines won a bidding war Monday for the assets of bankrupt TWA in a $742 million deal that will mean the end of one of the most celebrated names in aviation.
U.S. Bankruptcy Judge Peter Walsh said he would approve the purchase by American parent AMR Corp., much to the relief of TWA employees who feared the airline might be reacquired by its former chairman, billionaire financier Carl Icahn.
Icahn had proposed keeping TWA alive, but his $1.1 billion plan hinged on large job cuts and $100 million in labor concessions. The judge called the plan a joke last week.
American has said it expects to offer jobs to most of TWA's 20,000 workers, and the airline's unions are expected to approve the deal. The purchase is subject to approval by the Justice Department.
American spokesman John Hotard said the TWA name would disappear as the nation's longest-flying airline and its employees are folded into American.
"There is value" to the TWA name, "but we want everyone to be part of one big family," Hotard said. "You're better off from an employees' standpoint and marketing standpoint to have everyone under a single name."
The judge said he approved the bid in part because of fears TWA's creditors would seize its planes if the American deal fell through: "I think it is in the best interests of the estate for that not to happen."
TWA, based in St. Louis, was formed in 1930 from the merger of Western Air Express and Transcontinental Air Transport. That same 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. Joe DiMaggio made flights west on TWA to visit wife Marilyn Monroe in Hollywood. Four times, the pope flew TWA on visits to the United States.
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 time was Jan. 10, the day the merger with American was announced.
American, which also will assume $3.5 billion in TWA debt, could close the sale by early April.
Icahn plans to appeal, said Edward Weisfelner, Icahn's lawyer.
Brian Freeman, an investment banker who headed the effort for Icahn, said travelers would pay higher prices for plane tickets if the American deal goes through.
"We thought that the American proposal was anticompetitive and monopolistic, whereas ours would keep TWA alive as a separate, independent and viable carrier," Freeman said.
The judge said he planned to void the lucrative ticket contract Icahn has with TWA that allows him to buy certain tickets at 55 cents on the dollar. Icahn resells the tickets on the Internet at steep discounts. Airline experts have said the deal is partly to blame for TWA's financial failure.
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