The bankrupt Trans World Airlines Inc. indulged an
offer from former owner Carl Icahn, but ended up selecting a
sweetened $742 million deal from AMR Corp.'s American Airlines as
its preferred bid at an auction on Wednesday.
The final decision still rests with U.S. Bankruptcy Judge Peter
Walsh, who will consider several other offers as well during a sale
hearing on Friday in Wilmington, Del.
The auction began Monday, when a group backed by Icahn presented
a $650 million bid that would have kept the airline flying under
its own name. But after adjourning the auction to spend a few days
considering it, the TWA board ended up rejecting the financier's
"I'm not going to handicap what Judge Walsh will do," said TWA
spokesman Mark Abels. "We feel that the American offer is the
highest and best offer."
In addition to the bid from Icahn, whose dealings with TWA
workers were acrimonious, the airline also dismissed several others
for not following the rules of the bidding process established by
the bankruptcy court.
At the bankruptcy court hearing on Friday the spurred bidders
will have a chance to object and present their bids to the court.
It's possible Walsh could rule from the bench at Friday's
hearing, meaning TWA the longest flying carrier in American
commercial aviation could have a new owner in place by week's
American announced its initial bid of $500 million, plus the
assumption of $3.5 billion in debt and lease obligations, on Jan.
10 the same day the St. Louis-based carrier filed for bankruptcy.
At the request of TWA, American increase its bid Wednesday
afternoon by $242 million. TWA said the increased offer will help
it pay off a larger portion of its debts.
The bid backed by Icahn, who attended the auction Wednesday when
TWA selected the American offer, was filed several days after the
Feb. 28 deadline set by the court.
Abels said the Icahn bid contained several conditions that led
the airline's board to reject it. Most notably, it required TWA's
two unions to agree to concessions, an unlikely prospect
considering both refuse to have any dealings with Icahn or his
The other two bidders making offers for substantially all of
TWA's assets failed to provide the $50 million in "good-faith"
financing required by the court.
That includes Jet Acquisitions Group of Arizona, which offered
$889 million but never came through on several promises that it
would make the required deposit.
Abels said Jet Acquisitions asked TWA to provide a letter its
bank could use to demonstrate that financing was in place. The
letter was provided and never returned, Abels said.
The TWA board also rejected a $220 million bid from Rosemont,
Ill.-based Galileo International for the airline's 26 percent share
of Worldspan, a travel reservation service.
TWA has asked Walsh to approve a $125 million increase in what
is known as debtor-in-possession financing basically a loan that
allows TWA to continue operations as the bankruptcy progresses.
TWA, which has already been provided with $200 million in debtor
financing by American, wants the additional money primarily to pay
off aircraft lease payments that are coming due.
If American's offer is selected by the court, the Texas-based
airline will pay TWA $742 million in cash, minus whatever amount of
debtor financing TWA has used.