Missouri lawmakers said Thursday that American
Airlines' proposed acquisition of TWA could save thousands of jobs
in their state, but others cautioned that consumers could be the
losers from reduced competition.
Sen. John McCain, R-Ariz., chairman of the Senate Commerce
Committee, said the deal would accelerate movement toward control
of the aviation industry by three giants United, American and
Delta. "I don't know of anyone, other than the airlines, who think
that a 'Big 3' industry is good for the consumer," he said at a
hearing on the proposed American-TWA merger.
The deal is "fundamentally different" from other airline
consolidations that have recently changed the makeup of the
aviation industry, Missouri Gov. Bob Holden told the committee.
"The primary difference in this case is that TWA cannot be
saved without America's help."
He said that without the deal, Missouri would lose nearly 33,000
jobs and $876 million in annual wages "a devastating blow to our
state's economic future."
Trans World Airlines, which filed for bankruptcy protection last
month as part of its agreement with American, operates out of St.
Louis. The sale is subject to approval by the bankruptcy court.
"Having a hub in St. Louis is critical to maintaining the
region's economic vitality," said Sen. Jean Carnahan, D-Mo.
"Officials at American Airlines have assured me that they plan to
offer employment to virtually all of TWA's contract employees."
Some 4,000 jobs are also at stake at Kennedy Airport in New
York, said Rep. Gregory Meeks, D-N.Y. "I view this not as a merger
but as a rescue mission for TWA."
American agreed to buy most of TWA for about $500 million,
including up to 190 planes. American is also to pay $82 million for
a 49 percent stake in DC Air, a start-up to be created from the
merger of United and US Airways that is to be based at Reagan
National Airport outside Washington.
The proposal by American, the nation's second-largest airline,
came after United moved to acquire most of US Airways. If both
deals are approved, the two airlines would control half the U.S.
"Every independent analysis has concluded that these mergers
will erode what little competition remains in the aviation
industry," testified Rep. Louise Slaughter, D-N.Y.
"We all sympathize with TWA's workers," she said. "But my
district of Rochester, N.Y., has already seen thousands of jobs
lost because businesses move out when they can't afford our high
Don Carty, American chairman and chief executive officer,
acknowledged that the deal was spurred by United's proposed
takeover of US Airways. "If one airline is able to grow its route
network significantly larger than its competitors, that airline
would have a competitive advantage," he told the panel.
But he added that American was the only company willing to take
on the financial risk of saving the failing TWA and "it is truly a
stretch of the imagination to believe that the American-TWA
transaction could in any way trigger the merger of far larger
William F. Compton, president and chief executive of TWA, said
consumers would pay the price in a reduction of service if TWA
assets were liquidated without a commitment to maintaining jobs and