TWA’s Unions Sue to Block Sale of Routes
The city of St. Louis and unions representing Trans World Airlines workers asked a federal appeals court Friday to reverse the sale of three of TWA’s prized London routes to American Airlines.
If the airline is allowed to sell off its most valuable assets, said Susan Jollie, attorney for TWA’s flight attendants, “it will spiral into nothingness.”
Disintegration of the carrier could lead to the loss of thousands of jobs in the St. Louis area, taking millions of dollars from the local economy and the tax base, city officials said.
Transportation Secretary Samuel K. Skinner gave the financially troubled airline approval April 25 to sell its prized routes to London’s Heathrow Airport from New York, Boston and Los Angeles to American for $445 million. At the same time, Skinner denied permission for the sale of TWA’s London routes from St. Louis, Baltimore and Philadelphia.
American and TWA have already closed the deal, and although the route transfer is not scheduled to take place until July 1, they consider the matter finished.
The route sale has been viewed as a changing of the guard in transatlantic aviation, much like Pan American World Airways’ sale of London routes to United Airlines in April.
But Edward J. Hanlon, assistant city counselor for St. Louis, which owns Lambert Airport, told a three-judge panel of the U.S. 8th Circuit Court of Appeals on Friday that the sale could kill TWA.
And if the city lost the TWA hub, he said, it would eventually cost the area $1.9 billion annually and 23,000 jobs.
TWA’s only large domestic hub is in St. Louis. It also has a large maintenance facility in Kansas City, Mo., and more than a third of its 30,000 workers live in Missouri.
“We are aware of the importance of speed in this case,” said Circuit Judge Richard S. Arnold. “We will decide before July 1.”
TWA is trying to use the money from the route sales to try to buy its way out of debt by paying bondholders a fraction of the face value of their investments. American, meanwhile, is busily promoting its planned expansion into Heathrow, London’s most desirable airport.
But the unions and the city maintained Friday that without the London routes, TWA will be in even deeper trouble than it is now.
Paul Geier, attorney for the Transportation Department, said, however, that the agency had looked at all aspects of the route sale and had concluded that it would benefit TWA because it would give the struggling carrier cash to help reduce its debt.
TWA attorney Joe Sims agreed.
“There’s no doubt that TWA has serious problems and that the debt load must be reduced,” Sims said. “It can’t just be wished away. Without dealing with the short term, there will be no long term. In TWA’s lexicon, anything over 30 days is long term.”
Richard A. Rothman, attorney for American, said it was in TWA’s best interest to sell the routes because American and other competitors would take the business away from it anyway.
“Evidence showed TWA couldn’t compete on these routes, period,” Rothman said, noting that TWA had a poor on-time record and other problems at New York’s JFK Airport. “They couldn’t cut it on these routes. We need to have these routes transferred to a healthy carrier. This is what deregulation is all about.”
