Kerkorian, TWA’s Unions Agree to Bid for Carrier : Airlines: TWA’s chairman says he wasn’t even aware of the planned offer.

After an 18-hour negotiating session, Trans World Airlines’ unions and Beverly Hills billionaire Kirk Kerkorian agreed Friday to make a bid to buy the financially ailing carrier from investor Carl C. Icahn.

Under the agreement, Tracinda Corp., Kerkorian’s private investment company, would get two-thirds of TWA and the unions the other third. But the airline would then go through a financial restructuring in which TWA bondholders would get an ownership stake in exchange for some of their bonds.

Ultimately, Tracinda would wind up with about half of TWA, the unions about 23% and the bondholders about 27%.

That is, if the deal goes through.

In order to raise much-needed cash, TWA Chairman Icahn had previously reached a tentative deal to sell six transatlantic routes to competitor American Airlines for $445 million. But the Kerkorian bid depends on reversing the route sale, a pilots union official said.

Moreover, nothing has been presented to either Icahn or the bondholders.

Indeed, Icahn, reached at home Friday afternoon, said he wasn’t even aware of the agreement.

“It sort of reminds me of when hundreds of years ago the Spaniards and the Portuguese decided to carve up England, except for one thing--they neglected to inform the English,” Icahn said.

Kent Scott, president of the TWA pilots union, said the structure of the bid has yet to be determined, but some participants favor simply offering to take over the debt and give Icahn no money. “Whatever we give him,” Scott said, “it will be in the nominal consideration range.”

He said it was likely that Kerkorian would discuss the offer with Icahn this weekend.

Asked how he thought Icahn might respond, Scott said: “I think he’s secretly rooting us on.” Even after the sales of routes to American, Icahn would still have “a huge headache,” Scott added.

TWA, loaded with debt, has defaulted on $75.5 million in payments due bondholders. By swapping debt for equity, the unions and Kerkorian hope to cut $200 million to $250 million from the airline’s yearly interest costs, which now run at about $400 million.

Last weekend the unions agreed to give Kerkorian $137 million in annual concessions to bring him into the deal. TWA’s pilots would put up $40 million, the machinists $47 million and the flight attendants and non-contract employees $50 million.

But a pilots union official said labor requires something in return for the givebacks.

“We are not prepared to hand over $137 million for any deal that comes forth,” he said. One proviso the unions demand, for instance, is “protection against asset sales,” meaning that the airline could not be carved up and sold, causing mass firings.

The agreement between the Kerkorian forces and the pilots, machinists and flight attendants came at about 3 a.m. Friday, after a negotiating session that had begun at 9 a.m. Thursday.

Alex Yemenidjian, an official of Kerkorian’s MGM Grand Air who led the negotiations for Tracinda, said in an interview: “They (the unions) made the proposal and we accepted it. . . . We are very pleased to have accepted.” He praised the civic group that included the mayor of St. Louis, where TWA has its largest hub, for pushing for the agreement so that “TWA can be preserved as a strong, viable and competitive international and domestic carrier.”

Besides getting Icahn and the bondholders to go along, the London routes sale is another major stumbling block before a Kerkorian-union combination would assume control of TWA.

After American Airlines agreed to buy TWA’s London routes, the Transportation Department gave tentative approval for the sale of only three of them--Los Angeles, Boston and New York. But it tentatively rejected three others, Baltimore, St. Louis and Philadelphia.

Anyone objecting to the Transportation Department rulings had to do so by March 25. Comments on the objections had to have been made by Friday afternoon. The Transportation Department must then render final approval. Though it has no deadline for this ruling, Transportation Secretary Samuel K. Skinner said earlier this week that his ruling would come quickly.

Other carriers have said they are interested in the three London routes that were tentatively rejected. It is believed that Icahn could now probably pull out of the deal with American and sell all of the routes for a higher price to another entity. It is also believed that Kerkorian is interested in the deal only if all of the London routes were included.

But American Airlines has threatened to sue for damages if the deal is not consummated.

Times staff writer Denise Gellene contributed to this story.