American Cleared to Assume TWA Operations

The Transportation Department gave American Airlines clearance to take over the domestic and international operating authority of Trans World Airlines. The DOT action transfers TWA’s scheduled passenger and cargo service and routes to a subsidiary set up by American to handle TWA’s operations until its planned purchase of the financially ailing airline is completed. American is expected to close the $742-million deal Monday. Earlier, a district judge in Wilmington, Del., denied a motion to halt the sale. Financier and former TWA Chairman Carl Icahn, who had proposed reorganizing TWA as a stand-alone company, as well as committees representing TWA’s unsecured creditors and senior TWA note holders, had sought to stay the sale of TWA to American’s parent AMR Corp., claiming they would not profit from the deal. A TWA lawyer argued that the airline could not continue operations past early next week if the sale did not close. AMR shares fell $1.08 to close at $33.97 on the New York Stock Exchange.