Icahn’s Atypical Travel Agency Ticketed for IPO

Carl Icahn may be best known as a 1980s corporate raider, but the billionaire knows a lucrative 1990s trend when he sees it.

Lowestfare.com, an Icahn-owned travel agency on the Internet, plans an initial public stock offering to tap investors’ voracious appetite for e-commerce stocks. But Lowestfare.com is not your ordinary travel planner--electronic or otherwise.

Lowestfare.com at the moment is mostly a means of helping Icahn peddle roughly $600 million of tickets on struggling Trans World Airlines, which Icahn ran and helped finance between 1985 and 1993.

He got the tickets in 1995--or rather he received the right to buy the tickets from TWA at deep discounts for eight years--in exchange for renegotiating about $200 million of debt that TWA owed the New York financier.

Those purchases amounted to $345 million through 1998, and Icahn’s pact with TWA ends in 2003, according to Lowestfare.com’s registration filing with the Securities and Exchange Commission.

Nearly 97% of Lowestfare.com’s $224 million of revenue last year came from its TWA connection, the filing states. (Lowestfare.com’s revenue comes not only from the Internet, but also from a telephone reservation center and its affiliations with other travel agencies.)

Icahn’s office referred inquiries to Lowestfare.com Chief Executive Kenneth Swanton, who noted that Lowestfare.com also has travel alliances with America West Airlines, Northwest Airlines and Virgin Atlantic Airways.

Lowestfare.com also hopes to “broaden our discount relationships” with other major airlines, and develop “new and expanded discount offerings” with hotels, car-rental companies, cruise lines and tour-package operators, he said.

For now, a look at the home page of Lowestfare.com’s Web site doesn’t mention TWA by name. But its highlights do include travel packages to Stratosphere, a troubled Las Vegas hotel-casino that Icahn took over after it had sought bankruptcy court protection in 1997.

Lowestfare.com hopes to raise up to $138 million with its IPO, the filing states, though it doesn’t yet estimate the per-share price. The filing also doesn’t indicate that Icahn, who owns 99% of Lowestfare.com, is selling any of his shares in the IPO.

The filing also reveals plenty of risks in the offering, including the expiration of Icahn’s deal with TWA in 2003. It remains to be seen if Lowestfare.com can build up its other businesses by then.

Then there are the problems at TWA, which has been in bankruptcy reorganization twice in the last decade. The St. Louis-based carrier lately has made gains in its operating and financial performance, but it’s still losing money at a time when the airline industry is enjoying huge prosperity.

In addition, Icahn and TWA have been wrangling in court since 1995 over Icahn’s ability to resell the tickets to the public. Icahn so far has prevailed, but the fight continues.