By
The Associated Press
DALLAS - American Airlines has agreed to acquire most of 75-year-old Trans World Airlines' assets for about $500 million in a complex deal that will bring an end to the financially troubled TWA.
The agreement with TWA, along with a separate pact under which American would buy some of US Airways' assets from United Airlines, would leave American and United in control of about half of the nation's air travel market.
Under the multipart agreement unveiled yesterday, TWA has filed for Chapter 11 bankruptcy protection and will sell most of its assets to American, a subsidiary of AMR Corp., for $500 million in cash.
American will also assume responsibility for TWA's plane leases and provide an additional $200 million in immediate financing for the St. Louis-based airline.
In a concurrent move, American is acquiring certain US Airways assets for $1.2 billion in cash and the assumption of $300 million in aircraft leases. It will also pay $82 million for 49 percent of startup DC Air, which will fly out of Reagan National Airport in Washington.
The latter portions of the deal are contingent on federal regulators approving United parent UAL Corp's $4.3 billion proposal to purchase US Airways. Antitrust regulators have pressed United, the largest carrier in the world, to sell off some of its operations before they approve its purchase of US Airways, the nation's No. 6 carrier.
If everything is approved, it would leave the Chicago-based United and American, the nation's No. 2 carrier, head and shoulders above the rest of the U.S. airline industry, each with roughly 25 percent of the U.S. market. They are currently slightly larger than No. 3 Delta, which has 15 percent, according to industry figures.
American chairman and chief executive Donald J. Carty said at a press conference in New York that the deal gives American "a level of growth that otherwise take us years to achieve."
While the acquisitions don't represent a large increase in capacity, it redistributes it, Carty added, saying: "The company reflects a perfect fit for us."
