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American's Bid to Buy TWA Wins Antitrust Approval

Airlines: Transaction is expected to close in April after agreements with TWA's unions are finalized.

March 17, 2001|From Reuters

WASHINGTON — American Airlines' plan to buy struggling Trans World Airlines Inc. out from bankruptcy for $742 million cleared its last major hurdle Friday when it won approval from U.S. antitrust enforcers.

The Justice Department's antitrust division said in a brief statement that it would not oppose the purchase by American parent AMR Corp. after a "comprehensive investigation that included consideration of TWA's bankrupt condition."

American said it expects to close the transaction in April after finalizing labor agreements with TWA's unions.

The deal is another step in the consolidation of the U.S. airline industry. Regulators still are considering whether to approve plans by United Airlines parent UAL Corp. to acquire most of US Airways Group Inc.

American would buy 20% of US Airways as part of that deal. If all the transactions were completed, American and United together would control about half the U.S. air travel market.

Shares of AMR closed down 75 cents at $33.79 on the New York Stock Exchange on Friday, in line with the market's overall decline for the day.

In mentioning TWA's dire financial condition, antitrust officials echoed arguments made by company executives.

Under U.S. antitrust guidelines, regulators give special consideration to a purchase that preserves the operation of a failing company.

Representatives for both airlines said they were pleased by the Justice Department decision. "This is a major step forward, and we're looking forward to closing the transaction," TWA spokeswoman Chris Kelly said Friday.

Meanwhile Friday, TWA filed a motion in Bankruptcy Court in Wilmington, Del., which, if approved by the judge, would allow modification of the company's labor agreements as a prerequisite to closing the sale to American.

The labor contracts must be amended to allow the deal to close, and the company has not yet reached agreements with the unions representing its pilots and mechanics.

However, American has said it would guarantee employment to all of TWA's unionized workers under the terms of existing American Airlines labor contracts.

"The motion was filed as a precaution," Kelly said. "TWA remains optimistic that our unions will reach an agreement voluntarily, and if that happens the motion will be withdrawn."

A spokesman for the International Assn. of Machinists, which represents TWA's mechanics, said the union is looking for American to put its guarantees in writing.

Keith O'Leary, a spokesman for the TWA branch of the Air Line Pilots Assn., said his union supports the sale to American and is pleased with DOJ approval.

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