U.S. Clears TWA to Sell Only 3 of 6 London Routes : Airlines: The government cites competitive reasons. A “puzzled” American Airlines vows to appeal; TWA’s Icahn says the rejection could spell “disaster.”

The Transportation Department has tentatively approved the sale of only three of the six London routes that Trans World Airlines had agreed to sell to American Airlines, an action that TWA Chairman Carl C. Icahn said could spell “disaster” for his airline.

The department Thursday rejected the sale of TWA’s routes from Philadelphia, Baltimore and St. Louis to London, saying the transfers would stifle competition. The sale of routes from Los Angeles, New York and Boston to London was tentatively approved.

“I believe that this order could well become a disaster for TWA,” Icahn said in a statement. “If the sale is not completed, our financial condition, which is already precarious, will worsen substantially.”

On Feb. 1, TWA defaulted on debt payments of approximately $75.5 million. It said at the time that it had no intention of filing for bankruptcy.

TWA was to receive $445 million for the six routes, the lion’s share of which was for the three routes that were approved. American bought TWA’s London-Chicago route earlier for about $110 million and plans to begin service to London’s Gatwick Airport in June.

“At this point, TWA is selling the big-ticket items in this group,” said Thomas Longman, airline analyst with Bear, Stearns & Co. He estimated the value of the three approved routes at $300 million to $400 million.

American immediately said it would appeal. “We are puzzled by the order,” said Executive Vice President Donald J. Carty.

The order followed marathon sessions between the British and U.S. governments that ended Monday in an agreement allowing U.S. carriers that are not already doing so to fly into London’s Heathrow Airport. The agreement cleared the way for Pan American World Airways’ sale of its London routes to United Airlines, and it would enable TWA to transfer its Heathrow landing rights to American.

Carty said American could not understand why the U.S. government negotiated so hard to obtain London landing-rights transfers for U.S. airlines, only to turn around and reject a portion of the TWA-American transfer.

The Pan Am sale has already been approved, and United said Thursday that it would begin flying those routes April 3.

“I believe that the disparate treatment to TWA, when compared to the favorable treatment afforded Pan Am, is, to say the least, arbitrary and capricious,” TWA General Counsel Mark A. Buckstein said.

The Transportation Department’s action is by no means final. Objections to the tentative ruling may be filed until March 25. A response period would follow, after which the department would issue a final decree. The Justice Department must also approve sale of the routes.

The Transportation Department order said the Philadelphia and Baltimore routes should be sold to other carriers and TWA should continue to operate the St. Louis route.

The Baltimore and St. Louis routes go to London’s Gatwick Airport, to which American already flies from Miami and Washington. It is known that Delta Air Lines would like to scoop up some routes to London.