TWA Asks Judge to OK Nixing of Ticket Deal

Trans World Airlines has asked a bankruptcy judge to OK the nixing of former TWA President Carl Icahn’s cheap-ticket deal with the airline, which it called a financial sinkhole that could jeopardize its plans to be acquired by American Airlines. TWA said the contract with Icahn is an impediment to an auction of its assets by the March 12 deadline of its deal with American Airlines parent AMR Corp. and could force TWA into liquidation. But Icahn’s attorney has defended the contract, saying it should remain in place even if TWA is taken over by another carrier. In papers filed late Friday, St. Louis-based TWA, the eighth-largest U.S. airline, said it intended to reject the so-called Karabu contract valued at $200 million by Icahn, who says he also has $63 million in secured and unsecured claims against TWA. TWA agreed to the Karabu contract in 1995 to settle a $200-million loan from Icahn. Under its terms, TWA must sell Icahn passenger tickets until September 2003 at 55% of the published price. Icahn resells the tickets at a higher but still discounted price through his Web entity, Lowestfare.com Inc. On Jan. 10, TWA filed for Chapter 11 bankruptcy protection as part of an agreement to sell substantially all of its assets to American for $500 million in cash and the assumption of $3.5 billion in debt.