Action Delayed on Sale of TWA London Routes : Airlines: Kirk Kerkorian gets a chance to present a plan to stop the transfer to American.
The Department of Transportation on Wednesday delayed action on American Airlines’ plans to take over Trans World Airline’s London routes to allow Beverly Hills financier Kirk Kerkorian time to demonstrate that he has a workable plan to operate TWA.
Kerkorian has until the close of business Friday to file a formal business plan that “would assure the continued viability” of the ailing carrier, the department said.
In reopening testimony on final approval of the route transfer, the agency advanced Kerkorian’s Tracinda investment firm’s efforts to buy TWA intact and dealt at least a temporary setback to American, which had agreed to purchase six TWA London routes for $445 million.
The agency in March gave tentative approval to American’s purchase of the TWA routes between London’s Heathrow Airport and Boston, Los Angeles and New York. However, it denied the transfer to American of TWA’s routes between London and Philadelphia, Baltimore and St. Louis.
Meanwhile, American’s archrival, United Airlines, has begun service to Heathrow--the major gateway into Europe--on routes it purchased from troubled Pan American World Airways.
Opponents of the TWA route sale had until March 25 to make their feelings known. But after testimony was closed, Kerkorian and TWA’s unions agreed to make an offer for TWA provided the London routes were included. The unions--representing machinists, flight attendants and pilots--had agreed to give the financier annual concessions of $137 million. In return, Kerkorian said he would invest $250 million.
“Tracinda should be given an opportunity to explain its proposal further and to demonstrate that it would, in fact, be capable of fruition,” the department said in reopening testimony.
“You’d think if he had a business plan, he’d talk to the owner,” TWA chairman and owner Carl C. Icahn said in a telephone interview. “I think Kerkorian wants to strangulate TWA’s cash reserves, but this latest development is good because we will hopefully now have a decision quickly.”
Icahn, who has called Kerkorian a “spoiler,” said the airline could not long continue to operate without the funds for the London routes.
American said it was “disappointed” in the agency’s action. “Every week we don’t get the route approval we lose money because we cannot be out there selling those routes for summer travel,” an American spokesman said.
