TWA Lawyers Say American Has Only ‘Conforming’ Bid

Lawyers for Trans World Airlines Inc. received an offer Monday from a group backed by former owner Carl Icahn but said a bid submitted by AMR Corp.’s American Airlines is the only “competing and conforming” proposal for the airline.

TWA’s attorneys, who began an auction of the carrier’s assets Monday in New York, said they would look at and consider the other bids before making a recommendation to the court, however.

That recommendation is due Friday, when U.S. Bankruptcy Judge Peter Walsh will conduct a sale hearing in Wilmington, Del. It is possible Walsh will rule from the bench, meaning TWA--the longest-flying carrier in U.S. commercial aviation--could have a new owner in place by week’s end.

“We are letting the process go forward,” said TWA spokesman Mark Abels. “But, based on the experience of our council and our own intuitions, we don’t feel our purpose would be served by slamming doors while there are still some days left for people to put their bona fides on the table.”

That includes Icahn, who is providing financing to TWA Acquisitions Corp. The New York-based company presented the airline Monday with its own plans to reorganize the carrier and keep it flying under its own livery.

But Icahn carries with him his own special TWA baggage.

In 1988, Icahn’s decision to take the company private saddled TWA with $540 million in debt while returning $469 million to Icahn. He also holds a unique ticket deal, giving him the right buy some TWA tickets for 55 cents on the dollar.

The moves, which have haunted the airline ever since, have left bad feelings among TWA employees.

“I would expect, unless the sun starts coming up in the west, we’ll have nothing to do with Icahn,” said Frank Larkin, a spokesman for the International Assn. of Machinists and Aerospace Workers, TWA’s largest union. That sentiment was echoed by a spokesman for the Air Line Pilots Assn., TWA’s other union.

That could kill TWA Acquisitions’ deal before it gets much further. The company’s plan includes several conditions, including labor concessions and renegotiating of the airline’s leases at the same rate offered to American.

Brian Freeman, a New York-based investment banker and chairman and chief executive of TWA Acquisitions, said he would become chairman and CEO of the airline and Icahn would have no role in daily operations.

Freeman predicted American would keep only 10,000 TWA workers. But American’s bid includes a promise of employment to all of TWA’s 18,000 union employees, and Abels said preliminary discussions indicate American will keep “many, many, many” of the management employees.

The Icahn bid, however, fails to conform to rules set up by the court because it wasn’t filed by Feb. 28, Abels said. He added that he does expect Icahn to meet another condition--a $50-million good-faith deposit that Freeman said was delivered late Monday.

Other bidders, Jet Acquisitions Group of Arizona and Global Airlines of New York, have failed to make a deposit; subsequently, TWA also considers those bids nonconforming.

American Airlines has bid $500 million, plus the assumption of $3.5 billion in debt and lease obligations. American announced its plans to bid for TWA on Jan. 10, the day the St. Louis-based carrier filed for bankruptcy.