American-TWAAmerican Airlines and Trans World Airlines have been important to Hawaii's tourism development since they both started flying to the islands in 1969, in a government-approved expansion of transpacific air routes.
Hawaii's top tourism execDeal to be announced later this week
notes that both carriers are
important to tourism here
Bob Fishman, chief executive of the Hawaii Tourism Authority, said today he hopes that if they do merge, their roles in Hawaii will not diminish and that a merger won't reduce competition in mainland-Hawaii aviation.
American recently expanded its Hawaii traffic as part of a general expansion in the West, adding such routes as Dallas/Fort Worth-Maui, San Jose-Honolulu and San Jose-Maui.
TWA has provided a strong link for Hawaii, through its St. Louis hub, with tourist markets in the Midwest and Eastern states, Fishman said.
"TWA's nonstop direct St. Louis service has been part of the gateway effort we've been fighting for," to new major market areas whose residents stay longer in Hawaii and spend more money on average than their West Coast counterparts, he said.
Fishman said he hopes that a merger would not lessen competition.
"Competition has served us well. The carriers that are efficiently run, and those that are good solid enterprises when competing with each other, have always done Hawaii very well. When you see competition beginning to diminish there are concerns that arise, the same concerns regulators have," Fishman said.
A loss of competition can lead to fare increases and a decline in service, he noted.
ST. LOUIS -- American Airlines will announce plans this week to buy financially troubled Trans World Airlines Inc., part of a complex deal that could clear the way for antitrust approval of United Airlines' pending takeover of US Airways, several newspapers reported today.
moves to buy TWA
The complex deal could clear
the way for United's pending
takeover of US Air
By David Scott
Spokesmen for the carriers and other interests involved declined comment on reports in the Wall Street Journal and the Washington Post of a proposal that could mean the end of TWA, the oldest continuous name in American commercial aviation.
According to the Post, TWA plans to file for Chapter 11 bankruptcy protection on Wednesday, the third time it has done so, as a precursor of the takeover by AMR Corp.'s American Airlines, which would be announced the same day.
In a brief statement today, TWA said the airline "is always receptive to legitimate business overtures and is open to consideration of business combinations that will be beneficial." But the statement said TWA does not comment on discussions until, if, or when an agreement is reached.
American spokesman Tim Doke said American also doesn't comment on rumor or speculation. "We are talking to lots of folks about lots of different things all the time," he said.
TWA was founded July 13, 1925, as Western Air Express, and merged five years later with Transcontinental Air Transport to form to Transcontinental and Western Air, or TWA. The company changed the name without changing the initials in 1950, when then-owner Howard Hughes made it Trans World Airlines.
In midmorning trading today, TWA was unchanged at $1.32 a share on the American Stock Exchange while AMR shares fell $1.88 to $41.88 on the New York Stock Exchange.
The deal, whose price was not disclosed, also reportedly involves AMR buying a 49 percent stake in DC Air, a new carrier that is being crafted from United Airlines parent UAL Corp.'s planned $4.3 billion takeover of the Arlington, Va.-based US Airways Group Inc.
To ease antitrust concerns, DC Air -- which will be run by Black Entertainment Television founder Robert Johnson -- would have most of the takeoff and landing slots at Washington's Reagan National Airport now assigned to US Airways.
TWA is the nation's eighth-largest carrier, US Airways is No. 6, while American is No. 2. All three fall behind United Airlines, the world's largest.
The sale could end St. Louis-based TWA's decade-long struggle to turn a profit. However, sources said American does not plan to continue the TWA name, consigning it to the ranks of such once venerable air carriers as Pan American World Airways and Eastern Airlines.
Of the nation's top airlines, TWA was the only carrier to lose money in 1999 -- $353 million, the worst financial performance since the airline's second financial reorganization in 1995. Through the first three quarters, TWA lost $115.1 million.
The Journal reported that the deal calls for American to step in and provide financing after TWA's bankruptcy filing. The paper said the equity value of the TWA deal is small and talks on the debt are ongoing. Sources told the paper that the total value of the assets and the assumed liabilities is expected to be about $2 billion, depending on what value is given to some of the liabilities.
The Post reported that American would purchase all of TWA's assets and keep all 20,000 of the carrier's employees. The deal would make the Fort Worth, Texas-based American a comparable size carrier to the proposed United-US Airways merger.
Acquisition of TWA's St. Louis operations would give American a third hub in the middle of the country.
American already operates hubs at Chicago's O'Hare International Airport and at Dallas-Fort Worth International Airport.
The Post also reported that part of the American-TWA combination could include a deal with United to jointly operate the US Airways shuttle serving Washington, New York and Boston.
"This will handle most of the antitrust issues," Darryl Jenkins, a professor at George Washington University told the Post.