Tentative TWA Deal Snubs Icahn : Airlines: Unions are nearing a final agreement that leaves the chairman without a role.

NEW YORK — Cash-starved Trans World Airlines is on the verge of closing a deal that will let it escape from Chapter 11 bankruptcy--but with its bankers and unions piloting the carrier and Chairman Carl C. Icahn apparently left on the Tarmac.

After protracted negotiations, the International Assn. of Machinists agreed early Monday to terms of the arrangement, which calls for a 15% cut in wages and benefits over three years, along with work-rule changes.

The chief negotiator for the Airline Pilots’ Assn. was also finalizing details of an agreement with the airline late Monday, although spokesman David Berkley insisted that TWA had “jumped the gun” with its late-afternoon announcement that both unions had signed agreements in principle. The Federation of Flight Attendants signed a similar pact with TWA Aug. 14.

The union concessions will save TWA about $350 million a year, according to Icahn.

Under the plan, TWA’s banks will own 55% of the airline, and the unions will control the other 45%.

Airline sources said that the new TWA will be dominated by the bankers, explaining that a board made up of bankers and union representatives will select a new management team. The unions have demanded that Icahn not be part of a reorganized TWA, the sources said.

If the pilots sign the deal as expected, it will go before the U.S. Bankruptcy Court in Wilmington, Del., which is overseeing the airline’s reorganization. Analysts have suggested that reorganization is TWA’s last chance to avoid potentially devastating asset sales.

In a press release, Icahn said: “We are extremely pleased that all parties have come together to give new life to TWA.”

Icahn has agreed to provide the airline with $200 million to allow it to continue operating during the transition. He has also agreed to forgive debts with a face value of $170 million.

The company quoted James Spiotto, counsel to the TWA Creditors’ Committee, as saying: “The agreements with the TWA unions are a historic first, which represent the culmination of extensive negotiations and effort. Attention can now be focused on finalizing a plan of reorganization that revolves around these union agreements.”

The machinists union, by virtue of its large employee base at TWA, will receive the bulk of the unions’ share of the airline.

Until now, the pilots union has erected hurdles to the deal by seeking to protect its members’ jobs and gain assurances that their pensions would be paid in full. Talks with the Pension Benefit Guaranty Corp. over resolving a $1.2-billion shortfall in TWA’s pension fund continued to progress toward a settlement, a spokesman said Monday.

Icahn has agreed to personally guarantee much of the deficit, and all but about $150 million of the shortage has been negotiated away, a source familiar with the negotiations said.

The company quoted Victoria Frankovich, president of the flight attendants’ union, as saying: “The negotiations were tough, the concessions will be painful but necessary--but this will be worthwhile because it will be an employee-owned airline.”

As part of the restructuring, TWA hinted in its announcement that it will streamline operations. Among other actions, this will involve voluntary early retirement incentives and layoffs.

“This agreement will lead to some of the lowest seat-mile costs in the industry,” TWA spokesman Don Fleming said.

A large measure of employee ownership did not save Eastern Airlines from liquidation, and some close to the TWA deal were not persuaded that it would do the job this time, either.