Icahn Begins to Trim TWA as Promised

Carl C. Icahn, owner of Trans World Airlines, is carrying out his vow to shrink the airline unless its pilots agree to a 10% pay cut. Icahn announced Tuesday that he will sell two Boeing 747s outright and sell and lease back six Boeing 767s in a deal that will bring TWA $350 million.

Icahn and his employees have been fighting for months over the fate of TWA, which a decade ago was one of the nation’s biggest airlines. Neither side appears to be gaining ground.

“We’re doing what the pilots told us to do,” Icahn told the St. Louis Post-Dispatch. “They said, ‘Go ahead and shrink the airline,’ so we’re shrinking it.” (TWA operates a large hub and employs 8,000 people in St. Louis.)

Icahn also has been talking about selling more TWA routes. Two months ago, he agreed to sell the airline’s Chicago-to-London route to American Airlines.

The pilots say the decision of whether TWA gets bigger or smaller has little to do with them. Kent Scott, chairman of TWA’s pilots union, said he doesn’t see how the $80 million in concessions sought by Icahn would help the airline, which is burdened with $2.7 billion of debt and an aging, fuel-guzzling fleet.

Meanwhile, Icahn resumed negotiations this week with TWA’s mechanics, who have been working under an old contract for more than a year and have repeatedly said they would not accept any deal involving concessions. He did not return phone calls Wednesday to his office in Mt. Kisco, N.Y., where TWA is now based.

“Carl Icahn has to decide which way to go,” said Jim Carey, an airlines analyst at the Washington-based consulting firm Airline Economics. “It’s up to him, and I assume it depends on whether he can get wage concessions.”

Two other factors may prove to be more important in determining TWA’s future: The cost of jet fuel has increased about 50% higher in a year, and the rate of growth in air-passenger traffic is slowing.

It grew 5% or less in the last seven months, according to Avmark International, an aviation consulting firm.