As filed with the Securities and Exchange Commission
on July 2, 1998
Registration No. 333-________
=================================================================
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------
TRANS WORLD AIRLINES, INC.
(Exact Name of Registrant as Specified in Its Charter)
DELAWARE 4512 43-1145889
(State of (Primary Standard (I.R.S. Employer
Incorporation) Industrial Identification No.)
Classification
Code Number)
One City Centre
515 N. Sixth Street
St. Louis, Missouri 63101
(314) 589-3000
(Address, Including Zip Code, and Telephone Number,
Including Area Code, of Registrant's
Principal Executive Offices)
------------
Gerald L. Gitner Copies to:
Chairman and Chief David W. Hirsch, Esq.
Executive Officer Cleary, Gottlieb,
One City Centre, Steen & Hamilton
515 N. Sixth Street One Liberty Plaza
St. Louis, Missouri 63101 New York, New York 10006
(314) 589-3000 (212) 225-2000
(Name, Address, Including
Zip Code, and Telephone
Number, Including
Area Code, of
Agents for Service)
------------
Approximate date of commencement of proposed sale to the
public: From time to time after the effective date of this
registration statement.
If the only securities being registered on this Form are
being offered pursuant to dividend or interest reinvestment
plans, please check the following box. |_|
If any of the securities being registered on this Form are
to be offered on a delayed or continuous basis pursuant to Rule
415 under the Securities Act of 1933, as amended (the "Securities
Act"), other than securities offered only in connection with
dividend or interest reinvestment plans, check the following box.
|X|
If this Form is filed to register additional securities for
an offering pursuant to Rule 462(b) under the Securities Act,
please check the following box and list the Securities Act
registration statement number of the earlier effective
registration statement for the same offering. |_|
If this Form is a post-effective amendment filed pursuant
to Rule 462(c) under the Securities Act, check the following box
and list the Securities Act registration number of the earliest
effective registration statement for the same offering. |_|
If delivery of the prospectus is expected to be made
pursuant to Rule 434 under the Securities Act, please check the
following box. |_|
CALCULATION OF REGISTRATION FEE
=================================================================
Title of
Each Proposed Proposed
Class of Maximum Maximum
Securities Amount Offering Aggregate Amount of
to be to be Price Offering Registation
Registered Registered Per Unit Price Fee
- -----------------------------------------------------------------
Common Stock,
$.01 par
value 1,287,335
per share shares(1) $10.1875(2) $13,114,725 $3,869
=================================================================
- -------------------
(1) Estimated.
(2) Estimated solely for the purpose of calculating the
registration fee pursuant to Rule 457(c) on the basis of the
average of the high and low reported sales prices on June
25, 1998.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON
SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE
DATE UNTIL THE REGISTRANT SHALL FILE A FURTHER AMENDMENT WHICH
SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL
THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT, OR UNTIL THE REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT
TO SAID SECTION 8(A), MAY DETERMINE.
=================================================================
<PAGE>
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
+ INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR +
+ AMENDMENT. A REGISTRATION STATEMENT RELATING TO THESE +
+ SECURITIES HAS BEEN FILED WITH THE SECURITIES AND EXCHANGE +
+ COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY OFFERS +
+ TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION +
+ STATEMENT BECOMES EFFECTIVE. THIS PROSPECTUS SHALL NOT +
+ CONSTITUTE AN OFFER TO SELL OR THE SOLICITATION OF AN OFFER +
+ TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES IN ANY +
+ STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE +
+ UNLAWFUL PRIOR TO REGISTRATION OR QUALIFICATION UNDER THE +
+ SECURITIES LAWS OF ANY SUCH STATE. +
+++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++
Subject to Completion, dated July 2, 1998
PROSPECTUS
TRANS WORLD AIRLINES, INC.
1,287,335 Shares of Common Stock
---------------
This Prospectus relates to 1,287,335 shares of common
stock, $0.01 par value per share (the "Common Stock"), of Trans
World Airlines, Inc., a Delaware corporation ("TWA" or the
"Company"), issued upon conversion of $13.0 million principal
amount of 10 1/4% Mandatory Conversion Equity Notes due 1999 (the
"Equity Notes"). The Equity Notes were initially issued and
delivered by TWA to or as directed by First Security Bank,
National Association, as owner trustee (the "Owner Trustee")
under the trust agreement N607TW dated as of March 28, 1995
between 767 Leasing HY, LLC, as successor beneficiary to
Internationale Nederlanden Aviation Lease Delaware, Inc.
(currently known as ING Lease Delaware, Inc.), the beneficiary
named therein, and the Owner Trustee, in partial payment of the
aggregate purchase price of $27.5 million for one Boeing 767-231
ETOPS airframe and two associated engines (collectively, the
"Aircraft").
The Common Stock issued upon conversion of the Equity Notes
may be offered and sold from time to time by the holders named
herein or by their transferees, pledgees, donees, or their
successors (the "Selling Holders") pursuant to this Prospectus.
The Registration Statement of which this Prospectus is a part
(the "Registration Statement") has been filed with the Securities
and Exchange Commission (the "SEC" or the "Commission") pursuant
to the Company's obligations under a registration rights
agreement (the "Registration Rights Agreement") dated as of June
16, 1998 (the "Issue Date") by and among the Company, the Owner
Trustee and Lazard Freres & Co. LLC.
The Common Stock issued upon conversion of the Equity Notes
may be sold by the Selling Holders from time to time directly to
purchasers or through agents, underwriters or dealers. See "Plan
of Distribution." If required, the names of any agents or
underwriters involved in the sale of the Common Stock in respect
of which this Prospectus is being delivered, along with any
applicable agent's commission, dealer's purchase price or
underwriter's discount, will be set forth in an accompanying
supplement to this Prospectus (the "Prospectus Supplement").
Furthermore, information concerning Selling Holders set forth
herein may change from time to time, and the changes will be set
forth in such a Prospectus Supplement.
The Selling Holders will receive all of the net proceeds
from the sale of the shares of the Common Stock issued upon
conversion of the Equity Notes and will pay any and all
underwriting discounts and selling commissions applicable to the
sale of such Common Stock. The Company is responsible for payment
of all other expenses incident to the registration of such Common
Stock.
The Selling Holders and any broker-dealers, agents or
underwriters that participate in the distribution of the
securities offered hereby may be deemed to be "underwriters"
within the meaning of the Securities Act of 1933, as amended (the
"Securities Act"), and any commission received by them or
purchases by them of such securities at a price less than the
initial price to the public may be deemed to be underwriting
commissions or discounts under the Securities Act.
The Company intends to apply for listing of the Common
Stock issued upon conversion of the Equity Notes on the American
Stock Exchange ("ASE") under the symbol "TWA." On June 30, 1998,
the closing sale price on the ASE for one share of the Common
Stock was $10 3/8 per share.
(Continued on page 2)
---------------
PROSPECTIVE INVESTORS SHOULD CAREFULLY CONSIDER
MATTERS DISCUSSED UNDER THE CAPTION "RISK
FACTORS" ON PAGE 5.
---------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION, NOR HAS THE SECURITIES AND EXCHANGE
COMMISSION OR ANY STATE SECURITIES COMMISSION
PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE
CONTRARY IS A CRIMINAL OFFENSE.
---------------
THE DATE OF THIS PROSPECTUS IS JULY __, 1998.
<PAGE>
Pursuant to the Registration Rights Agreement, the Company
has also agreed to pay certain fees and expenses incident to the
registration of the Common Stock issued upon conversion of the
Equity Notes. It is estimated that the aggregate amount of fees
and expenses payable by the Company in connection with the
registration of the securities offered hereby will be
approximately $118,869. The Company intends to keep the
Registration Statement effective until the earlier of (i) the
sale of all Common Stock covered by the Registration Statement
and (ii) the expiration of two years after the Issue Date, or, if
the period applicable under Rule 144(k) under the Securities Act,
or any successor provision, is shortened, such shorter period.
No person has been authorized to give any information or to
make any representations not contained in this Prospectus in
connection with the offer of securities made by this Prospectus
and, if given or made, such information or representations must
not be relied upon as having been authorized by the Company or by
any underwriter, dealer or agent. This Prospectus does not
constitute an offer to sell or a solicitation of an offer to buy
any of the securities offered hereby in any jurisdiction to any
person to whom it is unlawful to make such offer or solicitation
in such jurisdiction. This Prospectus does not constitute an
offer to sell or a solicitation of an offer to buy any securities
other than those to which it relates. Neither the delivery of
this Prospectus nor any sale of, or offer to sell, the securities
offered hereby shall, under any circumstances, create an
implication that there has been no change in the affairs of the
Company since the date hereof or that the information herein is
correct as of any time subsequent to its date.
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<PAGE>
AVAILABLE INFORMATION
TWA is currently subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and in accordance therewith files reports, proxy
statements and other information with the Commission. Reports,
proxy statements and other information filed by the Company with
the Commission may be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549 and at the
Commission's regional offices located at Room 1400, 75 Park
Place, New York, New York 10007 and Suite 1400, Northwestern
Atrium Center, 500 West Madison Street, Chicago, Illinois
60661-2511. Copies of such materials may be obtained from the
Public Reference Section of the Commission at Room 1024, 450
Fifth Street, N.W., Washington, D.C. 20549 at prescribed rates,
and such reports, proxy statements and other information
regarding the Company can also be inspected at the offices of the
American Stock Exchange, 86 Trinity Place, New York, New York
10006-1881, on which the Company's Common Stock is listed. The
Commission maintains a Worldwide Web site that contains reports,
proxy and information statements and other materials that are
filed through the Commission's Electronic Data Gathering,
Analysis and Retrieval System. This web site can be accessed at
http://www.sec.gov. None of the information contained in such web
site shall be deemed to constitute a part of this Prospectus or
be incorporated herein for any purpose.
This Prospectus contains summaries, believed to be accurate
in all material respects, of certain terms of certain agreements;
however, in each such case, reference is made to the actual
agreements (copies of which will be made available upon request
to the Company) for complete information with respect thereto,
and all such summaries are qualified in their entirety by this
reference.
This Prospectus forms a part of the Registration Statement,
including all amendments (including post-effective amendments)
and exhibits thereto, which the Company has filed under the
Securities Act with respect to the securities offered hereby.
This Prospectus does not contain all the information otherwise
set forth in the Registration Statement, certain parts of which
are omitted in accordance with the rules and regulations of the
Commission. For further information, reference is made to the
Registration Statement and the exhibits filed as part thereof.
The Registration Statement may be inspected at the public
reference facilities maintained by the Commission at the
addresses set forth in the preceding paragraph. Statements
contained herein concerning any document filed as an exhibit are
not necessarily complete and, in each instance, reference is made
to the copy of such document filed as an exhibit to the
Registration Statement.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Company hereby incorporates by reference in this
Prospectus the following documents filed with the Commission
pursuant to the requirements of the Exchange Act (File No.
001-07815):
1. The Company's Annual Report on Form 10-K for the fiscal
year ended December 31, 1997, as amended on June 30, 1998 (the
"1997 10-K");
2. The Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1998 (the "10-Q");
3. The Company's Current Report on Form 8-K filed January
28, 1998;
4. The description of the Common Stock contained in the
Company's Form 8-A dated August 1, 1995 filed under the Exchange
Act, including any amendment or reports filed for the purpose of
updating such description; and
5. The Company's Proxy Statement and Notice of Meeting
relating to the Annual Meeting of Stockholders held on May 19,
1998.
In addition, all subsequent documents filed by the Company
with the Commission pursuant to Sections 13(a), 13(c), 14 or
15(d) of the Exchange Act after the date of this Prospectus and
prior to the termination of the
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<PAGE>
offering of the securities offered hereby (the "Offering") shall
be deemed to be incorporated herein by reference and to be a part
hereof from the date of filing such documents. Any statement
contained herein or in a document incorporated or deemed to be
incorporated by reference herein shall be deemed to be modified
or superseded for purposes of this Prospectus to the extent that
a statement contained herein or in any subsequently filed
document which also is or is deemed to be incorporated by
reference herein modifies or supersedes such statement. Any such
statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part of this
Prospectus.
THE COMPANY HEREBY UNDERTAKES TO FURNISH WITHOUT CHARGE TO
EACH PERSON TO WHOM A COPY OF THIS PROSPECTUS HAS BEEN DELIVERED,
UPON WRITTEN OR ORAL REQUEST OF SUCH PERSON, A COPY OF ANY AND
ALL DOCUMENTS INCORPORATED HEREIN BY REFERENCE (NOT INCLUDING
EXHIBITS TO SUCH DOCUMENTS, UNLESS SUCH EXHIBITS ARE SPECIFICALLY
INCORPORATED BY REFERENCE INTO SUCH DOCUMENTS). REQUESTS SHOULD
BE DIRECTED TO THE CORPORATE SECRETARY OF TRANS WORLD AIRLINES,
INC., ONE CITY CENTRE, 515 N. SIXTH STREET, ST. LOUIS, MISSOURI
63101, TELEPHONE (314) 589-3285.
FORWARD-LOOKING STATEMENTS
THIS PROSPECTUS (INCLUDING INFORMATION INCLUDED OR
INCORPORATED BY REFERENCE HEREIN) INCLUDES "FORWARD-LOOKING
STATEMENTS" WITHIN THE MEANING OF SECTION 27A OF THE SECURITIES
ACT AND SECTION 21E OF THE EXCHANGE ACT. ALL STATEMENTS REGARDING
THE COMPANY'S EXPECTED FINANCIAL POSITION, BUSINESS AND FINANCING
PLANS, INCLUDING THE COMPANY'S PLANS AND STRATEGY FOR IMPROVING
ITS OPERATIONAL AND FINANCIAL PERFORMANCE, ARE FORWARD-LOOKING
STATEMENTS. ALTHOUGH THE COMPANY BELIEVES THAT THE EXPECTATIONS
REFLECTED IN SUCH FORWARD-LOOKING STATEMENTS ARE REASONABLE, IT
CAN GIVE NO ASSURANCE THAT SUCH EXPECTATIONS WILL PROVE TO HAVE
BEEN CORRECT. IMPORTANT FACTORS THAT COULD CAUSE ACTUAL RESULTS
TO DIFFER MATERIALLY FROM SUCH EXPECTATIONS ("CAUTIONARY
STATEMENTS") ARE DISCLOSED IN OR INCORPORATED BY REFERENCE INTO
THIS PROSPECTUS, INCLUDING, WITHOUT LIMITATION, IN CONJUNCTION
WITH THE FORWARD-LOOKING STATEMENTS INCLUDED IN OR INCORPORATED
BY REFERENCE INTO THIS PROSPECTUS AND UNDER "RISK FACTORS." ALL
SUBSEQUENT WRITTEN AND ORAL FORWARD-LOOKING STATEMENTS
ATTRIBUTABLE TO THE COMPANY, ITS SUBSIDIARIES OR PERSONS ACTING
ON THE COMPANY'S OR ITS SUBSIDIARIES' BEHALF ARE EXPRESSLY
QUALIFIED IN THEIR ENTIRETY BY THE CAUTIONARY STATEMENTS.
4
<PAGE>
RISK FACTORS
In addition to the other information appearing in this
Prospectus, the following risk factors should be considered
carefully in evaluating the Company and its business before
purchasing the Common Stock offered hereby.
Risk Factors Related to the Company
Substantial Indebtedness
The Company is highly leveraged and has and will continue
to have significant debt service obligations. As of March 31,
1998, the Company's ratio of long-term debt and capital leases
(including current maturities, but net of unamortized discounts)
to shareholders' equity was 5.39 to 1. As of March 31, 1998,
after giving effect to the issuance on April 21, 1998 of the
Company's 11 3/8% Senior Secured Notes due 2003 (the "April
Secured Notes") and the Company's Mandatory Conversion Equity
Notes due 1999 (the "April Equity Notes" and, together with the
April Secured Notes, the "April Notes"), the issuance on June 16,
1998 of the Company's 10 1/4% Senior Secured Notes due 2003 (the
"Notes") and the Equity Notes, and the conversion into Common
Stock of the April Equity Notes on July __, 1998 and the Equity
Notes on July __, 1998, the aggregate principal amount of the
Company's total outstanding indebtedness would have been
approximately $1,204.9 million ($1,173.8 million net of
unamortized discounts), and the ratio of such long-term debt and
capital leases (including current maturities, but net of
unamortized discounts) to stockholders' equity would have been
4.68 to 1. The Company's estimated minimum payment obligations
under noncancellable operating leases in effect at March 31, 1998
were approximately $284.1 million for 1998 and approximately
$3,346.0 million for periods thereafter. These amounts exclude
payment obligations of the Company that will arise from financing
arrangements relating to 24 MD-83 aircraft that are more fully
described under "Management's Discussion and Analysis of
Financial Condition and Results of Operations--Liquidity and
Capital Resources--Commitments" in the 10-Q. Over the last
several years, the Company's earnings have not been sufficient to
cover fixed charges. The Company's earnings were not sufficient
to cover fixed charges by $80.6 million and $105.7 million for
the three months ended March 31, 1998 and March 31, 1997,
respectively, $94.1 million for the year ended December 31, 1997,
$280.0 million for the year ended December 31, 1996, $32.3
million for the four months ended December 31, 1995, $338.3
million for the eight months ended August 31, 1995, $435.0
million for the year ended December 31, 1994, $88.4 million for
the two months ended December 31, 1993 and $364.7 million for the
ten months ended October 31, 1993. See "Capitalization" included
herein and "Selected Consolidated Financial Data," "Management's
Discussion and Analysis of Financial Condition and Results of
Operations--General" and the Consolidated Financial Statements in
the 1997 10-K and the 10-Q.
The degree to which the Company is leveraged could have
important consequences to holders of the Equity Notes offered
hereby, including the following: (i) the Company's ability to
obtain additional financing in the future for working capital,
capital expenditures, acquisitions, general corporate purposes or
other purposes may be impaired; (ii) a substantial portion of the
Company's cash flow from operations must be dedicated to the
payment of principal and interest on the Company's existing
indebtedness; (iii) the Company is placed at a relative
competitive disadvantage to its less highly leveraged competitors
and is more vulnerable to economic downturns; and (iv) such
indebtedness contains restrictive and other covenants, that, if
not complied with, may result in an event of default that, if not
cured or waived, could have a material adverse effect on the
Company (including, under certain circumstances, a cross-default
of other debt).
Capital Expenditure Requirements
The Company's capital expenditures for 1998 are currently
anticipated to total approximately $90.4 million compared to
capital expenditures totaling approximately $100.1 million for
1997. The Company's capital expenditures budget for 1998 includes
$60.0 million for flight equipment-related expenditures
(including pre-delivery deposits for aircraft and the purchase of
aircraft engines and spare parts). See "Management's Discussion
and Analysis of Financial Condition and Results of
Operations--Liquidity and Capital Resources--Certain Other
Capital Requirements" in the 1997 10-K for a discussion of the
potential additional expenditures that may be
5
<PAGE>
required by the Company in order to address the year 2000-related
technology issues. While the Company is seeking financing for
certain of its planned capital expenditures, a substantial
portion of such expenditures are expected to utilize internally
generated funds. The inability to finance or otherwise fund such
expenditures could have a material adverse effect on the ability
of the Company to continue to implement its strategic plan.
Liquidity
The Company's ability to improve its financial position and
meet its financial obligations will depend upon a variety of
factors including: significantly improved operating results,
favorable domestic and international airfare pricing
environments, absence of adverse general economic conditions,
more effective operating cost controls and efficiencies and the
Company's ability to attract new capital and maintain adequate
liquidity. On December 31, 1997, the Company's total cash and
cash equivalents balance was approximately $237.8 million
(including amounts held in the Company's international operations
and by subsidiaries that, based upon various monetary regulations
and other factors, might not be immediately available to the
Company). This balance represented an increase of approximately
$56.2 million from the Company's corresponding cash balance at
December 31, 1996. This increase in the Company's cash balance
resulted primarily from the proceeds from various capital markets
offerings during 1997 and asset dispositions offset by capital
expenditures and debt repayments. Due to improvements in
operating results experienced by the Company, cash used by
operations in 1997 was reduced from the prior year. On March 31,
1998, the Company had total cash and cash equivalents of $346.1
million. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital
Resources--Liquidity" in the 1997 10-K and the 10-Q.
The Company has no unused credit lines and must satisfy all
of its working capital and capital expenditure requirements from
cash provided by operating activities, from external capital
sources or from the sale of assets. See "The Company--Business
Strategy" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital
Resources--Liquidity" in the 1997 10-K for a description of the
actions taken by the Company to improve its liquidity during
1997. As a result of the financings consummated in the fourth
quarter of 1997 and the repayment of certain debt in connection
therewith, assets with an approximate appraised value of $165.0
million were released from collateral liens. Since that time, the
Company has sold and subsequently leased back 15 B-727 aircraft
and sold two L-1011 aircraft leaving assets with an approximate
appraised value of $100.0 million free and clear of liens and
encumbrances. Further pledging of these unencumbered assets,
however, may be limited by negative pledge restrictions in
outstanding indebtedness. Substantially all of the Company's
other strategic assets have been pledged to secure various issues
of outstanding indebtedness of the Company. To the extent that
pledged assets are sold, the applicable financing agreements
generally require the sale proceeds to be applied to repay the
corresponding indebtedness. To the extent that the Company's
access to capital is constrained, the Company may not be able to
make certain capital expenditures or to continue to implement
certain other aspects of its strategic plan, and the Company may
therefore be unable to achieve the full benefits expected
therefrom. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations--Liquidity and Capital
Resources--Availability of NOLs" in the 1997 10-K and the 10-Q
for a discussion of the status of the Company's net operating
loss carryforwards.
The Company's long-term viability as well as its ability to
meet its existing debt and other obligations and future capital
commitments depends upon the Company's financial and operating
performance, which in turn is subject to, among other things,
prevailing economic conditions and certain other financial,
business and other factors beyond the Company's control. As
discussed in the 1997 10-K and the 10-Q, in late 1996 and early
1997, the Company began implementing certain operational changes
that are intended to improve the Company's financial results
through, among other things, improved operational reliability;
higher yields and load factors; increased fuel, pilot and other
aircraft operating efficiencies; and a decrease in
maintenance-related expenditures, employee headcount and
JFK-related operating costs. Although management believes that
such operational changes will be successful and that the
Company's cash flow from its operations and financing activities
should therefore be sufficient in the foreseeable future to meet
the Company's debt and other obligations and future capital
commitments, the airline industry in general and the Company in
particular are subject to significant risks and uncertainties
referred to in this Prospectus including under these Risk Factors
and in the 1997 10-K and the 10-Q under "Management's Discussion
and Analysis of Financial Condition and Results of
Operations--General" and
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<PAGE>
"--Liquidity and Capital Resources." Therefore, there can be no
assurance that the Company's operating results and financing
activities will be sufficient in the foreseeable future to meet
its debt and other obligations and future capital commitments.
Prior Operating Losses and Future Uncertainties Relating to
Results of Operations; Results for the First Quarter of 1998
The Company's long-term viability depends on its ability to
achieve and maintain profitable operations. Although the airline
industry has generally seen strengthened performance in recent
years, particularly since 1995 when many airlines reported record
profits, the Company has reported significant net losses. For
example, the Company reported a net loss of $227.5 million for
the combined 12-month period ended December 31, 1995 (including
extraordinary gains related to the '95 Reorganization (as defined
below)), while reporting an operating profit of $25.1 million
(including $58.0 million of non-cash expense relating to the
distribution of stock to employees as part of the '95
Reorganization), which represented the Company's first operating
profit since 1989. The Company's reported net loss of $284.8
million for 1996 represented a $57.3 million increase over the
1995 net loss, while the Company reported a $198.5 million
operating loss for 1996 (including special charges of $85.9
million), which represented a $223.6 million decline from its
operating profit in 1995. The Company's 1997 financial results
reflected a net loss of $110.8 million, which represented an
improvement of $174.0 million over the $284.8 million net loss
for the full year 1996, and a $29.3 million operating loss, which
represented a $169.2 million improvement over the $198.5 million
operating loss reported for the full year 1996. For a discussion
of such operating results and the substantial net losses incurred
during such periods, see "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and "The
Company--Business Strategy" in the 1997 10-K. Although the
Company has taken a number of actions that management believes
will improve future results, the Company will incur additional
expenses relating to these actions, including pilot training and
aircraft leases, and there can be no assurance that such actions
will make the Company's future operations profitable. See
"--Liquidity; Substantial Indebtedness; Capital Expenditure
Requirements" and "The Company--Business Strategy" in the 1997
10-K.
The Company's financial results for the first quarter 1998
reflect an operating loss of $68.7 million and a net loss before
extraordinary items of $54.1 million for the three months ended
March 31, 1998, including a non-cash operating expense of $26.5
million relating to the distribution in July 1998 of Common Stock
to employee stock plans. These results compare with an operating
loss of $99.5 million and a net loss before extraordinary items
of $70.0 million in the first quarter 1997. Excluding the effect
of non-cash expense associated with earned stock compensation,
the first quarter 1998 operating loss was $42.2 million compared
to the first quarter 1997 operating loss of $98.2 million.
Similarly calculated, the net loss before extraordinary items for
the first quarter 1998 and 1997 were $38.0 million and $69.3
million, respectively. Operating revenue for the first quarter
1998 was $765.4 million versus $762.3 million in the first
quarter 1997 despite a slight reduction in capacity from the
first quarter 1997 to 1998 resulting from the replacement of B747
and L-1011 aircraft with smaller B767, B757 and MD-80 aircraft.
The Company has historically experienced significant
variations in quarterly and annual operating revenues and
operating expenses and expects such variations to continue. Due
to the greater demand for air travel during the summer months,
airline industry revenues for the third quarter of the year are
generally significantly greater than revenues in the first and
fourth quarters of the year and moderately greater than revenues
in the second quarter of the year. In the past, given the
Company's historical dependence on summer leisure travel, the
Company's results of operations have been particularly sensitive
to such seasonality. While the Company, through an acceleration
of its fleet renewal program and restructuring of its JFK
operations, anticipates that the deseasonalization of operations
affected thereby will reduce quarter-to-quarter fluctuations in
the future, there can be no assurance that such deseasonalization
will occur.
The Company's results of operations have also been impacted
by numerous other factors that are not necessarily seasonal.
Among the uncertainties that might adversely impact the Company's
future results of operations are: (i) competitive pricing and
scheduling initiatives; (ii) the availability and cost of
capital; (iii) increases in fuel and other operating costs; (iv)
insufficient levels of air passenger traffic resulting from,
among
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<PAGE>
other things, war, threat of war, terrorism or changes in the
economy; (v) governmental limitations on the ability of the
Company to service certain airports and/or foreign markets; (vi)
regulatory requirements necessitating additional capital or
operating expenditures; (vii) the outcome of certain ongoing
labor negotiations (see "--'94 Labor Agreements"); and (viii) the
reduction in yield due to the continued implementation of a
discount ticket program entered into by the Company with Karabu
Corporation ("Karabu"), a Delaware corporation controlled by Carl
Icahn, in connection with the '95 Reorganization on the terms
currently applied by Karabu (which terms are, in the opinion of
the Company, inconsistent with, and in violation of, the
agreement (the "Ticket Agreement") governing such program) (see
below and "Management's Discussion and Analysis of Financial
Condition and Results of Operations--General" and "Legal
Proceedings--Icahn Litigation" in the 10-Q). The Company is
unable to predict the potential impact of any such uncertainties
upon its future results of operations.
On March 20, 1996, the Company filed a petition (the "TWA
Petition") in the Circuit Court for St. Louis County, Missouri,
commencing a lawsuit against Carl Icahn, Karabu and certain other
entities affiliated with Icahn (collectively, the "Icahn
Defendants"). The TWA Petition alleged that the Icahn Defendants
are violating the Ticket Agreement between the Company and Karabu
relating to the discount ticket program and otherwise tortiously
interfering with the Company's business expectancy and
contractual relationships by, among other things, marketing and
selling tickets purchased under the Ticket Agreement to the
general public. The TWA Petition sought a declaratory judgment
finding that the Icahn Defendants have violated the Ticket
Agreement, and also sought liquidated, compensatory and punitive
damages, in addition to the Company's costs and attorney's fees.
On May 7, 1998 the court denied the TWA Petition and dismissed
the Icahn Defendants' counterclaims. The court concluded that the
Icahn Defendants could sell discount tickets under the Ticket
Agreement to any person who actually uses the ticket, including
non-business travelers, and that the Icahn Defendants had not
breached the Ticket Agreement. No damages were assessed in
respect to either plaintiff's or defendants' petitions.
The court's ruling could have an adverse effect on TWA's
revenue, which could be significant but the impact of which will
depend on a number of factors, including yield, load factors and
whether any resulting incremental sales by the Icahn Defendants
will be to passengers that would not otherwise have flown on TWA.
The Icahn Defendants moved to amend or modify the court's ruling
to include a declaratory judgment that the Icahn Defendants are
permitted to sell tickets to any person for any purpose, which
could include use by the purchaser's family members or friends.
TWA opposed this motion and requested that the court clarify the
ruling to limit its scope consistent with the reasoning set forth
in the decision, specifically that the person purchasing the
ticket must use the ticket (with certain enumerated exceptions)
and may not purchase a ticket for any other person. The court
denied both motions on June 25, 1998. TWA intends to appeal the
denial of its motion for clarification and the court's original
ruling.
Crash of Flight 800
On July 17, 1996, TWA Flight 800 crashed shortly after
departure from JFK en route to Paris, France. There were no
survivors among the 230 passengers and crew members aboard the
Boeing 747 aircraft. The Company is cooperating fully with all
federal, state and local regulatory and investigatory agencies to
ascertain the cause of the crash, which to date has not been
determined. The National Transportation Safety Board held
hearings relating to the crash in December 1997 and is continuing
its investigation. While the Company is currently a defendant in
a number of lawsuits relating to the crash, it is unable to
predict the amount of claims that may ultimately be made against
the Company or how those claims might be resolved. The Company
maintains substantial insurance coverage and, at this time,
management has no reason to believe that such insurance coverage
will not be sufficient to cover the claims arising from the
crash. Therefore, the Company believes that the resolution of
such claims will not have a material adverse effect on its
financial condition or results of operations. The Company is
unable to identify or predict the extent of any adverse effect on
its revenues, yields or results of operations that has resulted
or may result from the public perception of the crash or from any
future findings by the National Transportation Safety Board. See
"Business--Legal Proceedings" in the 1997 10-K.
8
<PAGE>
Changes to Management Team
Commencing in June 1996, the Company experienced a
substantial number of changes in its executive management team.
Although the Company believes that a stable executive management
team has now been put in place, there can be no assurance that
future changes will not occur or, if such changes do occur, that
they will not adversely affect future operations.
Current Executives of the Company
Date of Election
or Appointment
Name Current Title as Executive
- ---- ------------- ------------
Gerald L. Gitner(1) Chairman & CEO December 1996
William F. Compton(2) President & COO December 1996
Michael J. Palumbo Senior Vice
President & CFO December 1996
Donald M. Casey Executive Vice
President, Marketing May 1997
James F. Martin Senior Vice President,
Human Resources November 1997
Kathleen A. Soled Senior Vice President
& General Counsel January 1998
- ----------------
(1) Mr. Gitner, a director since November 1993, was Vice
Chairman and Acting CEO from December 1996 until February
1997.
(2) Mr. Compton, a director since November 1993, was Acting
Executive Vice President, Operations from December 1996
until March 1997 and Executive Vice President, Operations
from March 1997 until December 1997.
In addition, David M. Kennedy, a director, served as Acting
Executive Vice President and Chief Operating Officer from
December 1996 until June 1997.
'94 Labor Agreements
As of March 31, 1998, the Company had approximately 22,203
full-time employees (based upon full-time equivalents that
include part-time employees). Of these, approximately 84.6% were
represented by the Air Line Pilots Association ("ALPA") and the
International Association of Machinists and Aerospace Workers
(the "IAM"). On March 6, 1997, the IAM was certified to replace
the Independent Federation of Flight Attendants (the "IFFA") as
the bargaining representative of the Company's flight attendants.
The Company's currently effective collective bargaining agreement
with each such union (collectively, the "'94 Labor Agreements")
contain more favorable work rules than in prior contracts and
wage levels that the Company believes to be below many other U.S.
airlines. The '94 Labor Agreements are three-year agreements that
became amendable as of August 31, 1997. Negotiations on a new
collective bargaining agreement with the IAM with regard to the
flight attendants commenced in July 1997 and are currently
ongoing, and negotiations regarding the Company's ground
employees represented by the IAM commenced in February 1997 and
are currently ongoing. Negotiations on a new collective
bargaining agreement with ALPA commenced in June 1997 and are
currently ongoing. Under the Railway Labor Act (the "RLA"),
workers whose contracts have become amendable are required to
continue to work under the "status quo" (i.e., under the terms of
employment antedating the amendable date) until the RLA's
procedures are exhausted. Under the RLA, the Company and its
unions are obligated to continue to bargain until agreement is
reached or until a mediator is appointed and concludes that
negotiations are deadlocked and mediation efforts have failed.
The mediator must then further attempt to induce the parties to
agree to arbitrate the dispute. If either party refuses to
arbitrate, then the mediator must notify the parties that his
efforts have failed and, after a 30-day cooling-off period, a
strike or other direct action may be taken by the parties. At the
request of the IAM, a mediator was appointed on August 6, 1997
with respect to ground employees represented by the IAM. On March
27, 1998, at the request of the IAM, a mediator was appointed
with respect to the flight attendants represented by the IAM.
In the opinion of management, the Company's financial
resources are not as great as those of most of its competitors,
and, therefore, management believes that any substantial increase
in its labor costs as a result of any new labor agreements or any
cessation or disruption of operations due to any strike or work
action could be particularly damaging to the Company. See
"Business--Employees" in the 1997 10-K.
9
<PAGE>
In connection with certain wage scale adjustments afforded
to non-contract employees, employees previously represented by
the IFFA have asserted and won an arbitration ruling with respect
to the comparability of wage concessions made in 1994 that, if
sustained, would require that the Company provide additional
compensation to such employees. The Company estimates that at
December 31, 1997 such additional compensation that would be
payable pursuant to the arbitration ruling would be approximately
$12.0 million. The Company denies any such obligation and is
pursuing an appeal of the arbitration ruling and a court award
affirming the ruling. Effective September 1, 1997, the Company
also reduced the overall compensation and benefits package for
non-contract employees so as to offset, in the Company's view,
any claims by such employees previously represented by IFFA for
any retroactive or prospective wage increases. As such, no
liability has been recorded by the Company.
Age of Fleet; Noise
At March 31, 1998, the average age of the Company's
operating aircraft fleet was 16.5 years, making the Company's
fleet one of the oldest of U.S. air carriers. As a result, the
Company has incurred increased overall operating costs due to the
higher maintenance, fuel and other operating costs associated
with older aircraft. During 1997, the Company acquired 27 new or
later-model used aircraft. The Company expects to continue the
process of acquiring a number of new and later-model used
aircraft. As of March 31, 1998, the Company's fleet included 55
aircraft that did not meet the noise reduction requirements under
the Airport Noise and Capacity Act of 1990 (the "Noise Act") and
must therefore be retired or substantially modified by the end of
1999. Although the Company has plans to meet the Noise Act's
noise reduction requirement, there can be no assurance that such
plans will be achieved. In addition, in 1990 the Federal Aviation
Association (the "FAA") issued several Airworthiness Directives
("ADs") mandating changes to maintenance programs for older
aircraft to ensure the oldest portion of the nation's fleet
remains airworthy. Many of the Company's aircraft are currently
affected by these aging aircraft ADs. In 1996 and 1997, the
Company spent approximately $3.4 million and $4.2 million,
respectively, to comply with aging aircraft maintenance
requirements. Based on information currently available to the
Company and its current fleet plan, the Company estimates that
costs associated with complying with these aging aircraft
maintenance requirements will aggregate an additional
approximately $19.8 million through the year 2001. These cost
estimates assume, among other things, that newer aircraft will
replace certain of the Company's existing aircraft and that, as a
result, certain aircraft will be retired by the Company before
the Company would be required to make certain aging aircraft
maintenance expenditures. There can be no assurance that the
Company will be able to implement fully its fleet plan or that
the cost of complying with aging aircraft maintenance
requirements will not be significantly increased. See
"--Liquidity; Substantial Indebtedness; Capital Expenditure
Requirements" above and "Business--Regulatory Matters--Noise
Abatement" and "--Aging Aircraft Maintenance" in the 1997 10-K.
Potential Dilution
The Company underwent two financial restructurings during
the period between 1992 and 1995, with the first of such
restructurings effected in 1993 (the "'93 Reorganization") and
the second of such restructurings effected in 1995 (the "'95
Reorganization"). Pursuant to the '95 Reorganization, the Company
canceled its then outstanding equity securities in exchange for
new securities and other consideration and issued a special class
of voting preferred stock in three series (the "Employee
Preferred Stock") to its union employees and shares of Common
Stock to its non-union employees. Also in connection with and as
a precondition to the '95 Reorganization, in August and September
of 1994, the Company entered into the '94 Labor Agreements. In
exchange for the concessions received in the '94 Labor
Agreements, the Company, among other things, adopted an employee
stock incentive program (the "ESIP") to permit the Company's
employees to increase their level of ownership through grants by
the Company to its employees of additional shares of Employee
Preferred Stock and Common Stock.
The first stock grant under the ESIP was to be made on July
15, 1997 in an amount sufficient to increase employee ownership
of the combined total number of then outstanding shares of Common
Stock and Employee Preferred Stock by 2.0% if the average closing
price of the Common Stock for 30 consecutive trading days (the
"Average Closing Price") exceeded a target price of $11.00 per
share during the period from January 1, 1997 to July 14, 1997.
Because this target price was not reached, this grant instead
will be made on July 15 of the next year (up to and including
July 15, 2002) in which the Average Closing Price of the Common
Stock exceeds such target price
10
<PAGE>
prior to July 15 of that year. In each of 1998 through 2002,
additional shares of Employee Preferred Stock and Common Stock
will become subject to grant under this program in an amount
sufficient to increase the employee ownership by 1.5% for 1998,
1.5% for 1999, 1.0% for 2000, 1.0% for 2001 and 1.0% for 2002
(subject to adjustment as described below) based on the combined
total number of shares of Common Stock and Employee Preferred
Stock outstanding as of the applicable July 15 grant date, with
the target price applicable to the additional shares made
available for grant in such year equal to $12.10 for 1998, $13.31
for 1999, $14.64 for 2000, $16.11 for 2001 and $17.72 for 2002.
Each such grant is cumulative and, where the applicable target
price is not met in the initial grant year, the applicable grant
is carried forward and is subject to grant in future years up to
and including July 15, 2002 in the manner described above. To
protect against the dilutive effect of certain stock issuances,
the ESIP provides for an adjustment (the "Adjustment") to the
grants described above in the event the Company issues additional
Common Stock to third parties or in lieu of cash payments on the
12% Senior Secured Reset Notes due 1998 (the "12% Reset Notes")
or the Company's Mandatorily Redeemable 12% Preferred Stock (both
the 12% Reset Notes and the Mandatorily Redeemable 12% Preferred
Stock have been retired). To the extent that a sale of additional
capital stock results in a decline in the percentage of employee
ownership of the combined total number of shares of Common Stock
and Employee Preferred Stock below a level equal to the Adjusted
Base Ownership Percentage (as defined in the ESIP), one-quarter
of the difference between the new percentage of employee
ownership and the Adjusted Base Ownership Percentage (but in no
event greater than 1.0% in each year) would be added to the
percentage of Employee Preferred Stock and Common Stock to be
granted to union employees and non-union employees, respectively,
under the ESIP in each of the years 1999 through 2002, assuming
the target prices are met. Furthermore, if the Company issues
additional shares of Common Stock to third parties at a price
equal to or greater than $11.00 per share where the aggregate
proceeds or debt reduction therefrom exceeds $20 million (the
"Equity Issuance Acceleration Trigger"), the last two scheduled
grants under the ESIP are to be aggregated and these shares
allocated equally to the remaining installments in the program.
In addition, pursuant to the ESIP, employees have the option
commencing July 15, 1997 through July 15, 2002, to purchase
additional shares of Employee Preferred Stock in amounts up to an
aggregate of 2.0% of the combined total number of outstanding
shares of Common Stock and Employee Preferred Stock at a discount
of 20.0% from the then current market price. Should all of the
target prices be met or exceeded within the time periods
specified and should the entire discount stock purchase option be
exercised, the various employee stock trusts would receive a
total of (i) 2.0% of the Common Stock and Employee Preferred
Stock outstanding as of the date(s) of exercise of the discount
stock purchase option plus (ii) an amount sufficient to increase
employee ownership of the combined total number of then
outstanding shares of Common Stock and Employee Preferred Stock
by 8.0% (in each case, adjusted as described below), with the
exact amount issued dependent upon the number of shares
outstanding as of the date of each grant and option exercise.
The ESIP separately provides that if additional shares of
Employee Preferred Stock and Common Stock are distributed
following the August 23, 1995 effective date (the "'95 Effective
Date") in respect of the '95 Reorganization, employees will be
entitled to receive an additional number of shares of Employee
Preferred Stock and Common Stock such that the employees will
retain the same level of ownership. Union representatives and the
Company agreed to a one-time distribution pursuant to this
provision of the ESIP in an aggregate amount of 525,856 shares of
Employee Preferred Stock and Common Stock. As part of that
agreement, because additional ESIP shares were not issued to the
employees in July 1997, an additional 405,750 shares of Employee
Preferred Stock and Common Stock were issued to the employee
trusts and, to the extent that additional shares are granted
under the ESIP, the Company will receive a credit toward the new
grant for these previously issued shares, in that amount.
While the $11.00 target price was not exceeded as of July
15, 1997 and no grant was made on that date, on February 17,
1998, the Average Closing Price for the Company's Common Stock
did exceed the $11.00 target price with respect to the first
scheduled grant. As a result, the initial grant will be made on
July 15, 1998 in an amount sufficient to increase the employee
ownership by 2.0% based on the amount of Common Stock and
Employee Preferred Stock outstanding on July 15, 1998. Based on
the Voting Equity (as defined in the ESIP) of 57,890,907 shares
outstanding on January 30, 1998, the amount of Employee Preferred
Stock and Common Stock to be issued to the employees under the
ESIP on July 15, 1998 would be 1,515,472 shares. The Company is
entitled to a credit against this number in the amount of 405,750
shares due to the prior grant to employees as described above. In
addition, on March 4, 1998, the Average Closing Price for the
Company's Common Stock exceeded the $12.10
11
<PAGE>
target price with respect to the 1998 grant of 1.5%. As a result,
the 1998 grant will also be made on July 15, 1998 based on the
then outstanding amount of Common Stock and Employee Preferred
Stock in an amount sufficient to increase the employee ownership
by 1.5%. Based on the Voting Equity of 57,890,907 shares
outstanding on January 30, 1998, the number of additional shares
of Employee Preferred Stock and Common Stock to be issued under
the ESIP on that date for the 1998 grant would be 1,172,354
shares, which together with the shares to be issued in connection
with the 1997 grant equals a total of 2,282,076 shares. The
number of shares to be granted could be increased if the last two
grants under the ESIP are accelerated pursuant to the Equity
Issuance Acceleration Trigger. Furthermore, based on issuances of
Common Stock to date, the Adjustment has resulted in a revised
grant schedule of 1.5% for 1998, 1.84% for 1999, 1.34% for 2000,
1.34% for 2001 and 1.34% for 2002. Assuming the Transaction is
consummated and taking into account the Common Stock to be issued
upon conversion of the April Equity Notes and the Equity Notes,
the grants for the years 1999 through 2002 would further increase
pursuant to the Adjustment to: 2.13% for 1999, 1.63% for 2000,
1.63% for 2001 and 1.63% for 2002. Finally, in the event that the
Transaction is consummated and the initial conversion price of
the Equity Notes to be issued in connection with the Transaction
is in excess of $11.00 per share, the Equity Issuance
Acceleration Trigger will be met and the final two scheduled
installments will be aggregated and these shares will be
allocated equally to the remaining installments in the program.
As a result, the remaining grants would be as follows: 2.81% for
1997 (already vested and payable on July 15, 1998); 2.31% for
1998 (already vested and payable on July 15, 1998); 2.94% for
1999 if the Average Closing Price exceeds $13.31 and 2.44% for
2000 if the Average Closing Price exceeds $14.64.
In 1994, the Board adopted the Company's 1994 Key Employee
Stock Incentive Plan (the "KESIP") to motivate, attract and
retain the services of certain key employees of the Company. As
amended, the KESIP provides for the award of incentive and
nonqualified stock options for a cumulative total of up to 14% of
the aggregate number of shares of Common Stock and Employee
Preferred Stock outstanding as of January 1 of each year, subject
to certain restrictions. As of June 1, 1998, 88 employees had
been granted options to purchase shares of Common Stock or
Employee Preferred Stock at prices ranging from $4.64 to $18.37
per share. All options granted under the KESIP have a five-year
life and unless otherwise approved by the Compensation Committee
vest at a rate of 34%, 33% and 33% on the first three
anniversaries of the award date of such options. See
"Business--Employees" in the 1997 10-K.
In March 1996, the Company issued 3,869,000 shares of the
Company's 8% Cumulative Convertible Exchangeable Preferred Stock
(the "8% Preferred Stock"), which are convertible at the option
of the holder, unless previously redeemed or exchanged, into
shares of Common Stock at a conversion price of $20.269 per share
(equivalent to a conversion rate of approximately 2.467 shares of
Common Stock for each share of 8% Preferred Stock), subject to
adjustment under certain circumstances. Based on the current
conversion price, upon conversion of all shares of 8% Preferred
Stock into shares of Common Stock, an aggregate of 9,544,823
additional shares of Common Stock would be issued.
In March 1997, the Company issued 50,000 Units (the
"Units") each consisting of (i) one 12% Senior Secured Note due
April 1, 2002 (a "12% Note"), in the principal amount of $1,000,
of the Company and (ii) one Redeemable Warrant (a "Warrant') to
purchase 126.26 shares of Common Stock at an exercise price of
approximately $7.92 per share. The Warrants are exercisable
commencing March 31, 1998 through their expiration on April 1,
2002, unless previously redeemed by the Company. If all of the
Warrants were exercised, an aggregate of 6,313,000 additional
shares of Common Stock would be issued.
In December 1997, the Company issued 1,725,000 shares of
the Company's 9 1/4% Cumulative Convertible Exchangeable
Preferred Stock (the "9 1/4% Preferred Stock"), which are
convertible at the option of the holder, unless previously
redeemed or exchanged, into shares of Common Stock at a
conversion price of $7.90 per share (equivalent to a conversion
rate of approximately 6.329 shares of Common Stock for each share
of 9 1/4% Preferred Stock), subject to adjustment under certain
circumstances. Based on the current conversion price, upon
conversion of all shares of 9 1/4% Preferred Stock into shares of
Common Stock, an aggregate of 10,917,525 additional shares of
Common Stock would be issued.
12
<PAGE>
In April 1998, the Company issued the April Equity Notes,
which are convertible into shares of Common Stock at a conversion
price equal to the lower of (i) $10.875 or (ii) 95% of the
average closing price of the Common Stock for the 20 consecutive
trading days ending on the last trading day prior to the
Conversion Date (as defined in the indenture for the April Equity
Notes). Based on a conversion price of 95% of the closing price
of the Common Stock on June 30, 1998, upon conversion of all of
the April Equity Notes into shares of Common Stock, an aggregate
of 3,226,379 additional shares of Common Stock would be issued.
Corporate Governance Provisions; Special Voting
Arrangements
As a result of provisions of the '94 Labor Agreements, the
Company's Third Amended and Restated Certificate of Incorporation
(the "Certificate of Incorporation") and Amended and Restated
By-laws (the "By-laws") contain provisions (the "Blocking
Coalition Provisions") that allow certain corporate actions
requiring board approval, including mergers, consolidations and
sale of all or substantially all the assets of the Company, to be
blocked by a vote of six (four union-elected directors and two
other directors) of the Company's fifteen directors, who together
constitute a "Blocking Coalition." Actions subject to disapproval
by the Blocking Coalition include: (a) any sale, transfer or
disposition, in a single or series of transactions, of at least
20% of the Company's assets, except for transactions in the
ordinary course of business, including aircraft transactions as
part of a fleet management plan; (b) any merger of the Company
into or with, or consolidation of the Company with, any other
entity; (c) any business combination within the meaning of
Section 203 of the Delaware General Corporation Law (the "DGCL");
(d) any dissolution or liquidation of the Company; (e) any filing
of a petition for bankruptcy, reorganization or receivership
under any state or federal bankruptcy, reorganization or
insolvency law; (f) any repurchase, retirement or redemption of
the Company's capital stock or other securities prior to their
scheduled maturity or expiration, except for redemptions out of
the proceeds of any substantially concurrent offering of
comparable or junior securities and mandatory redemptions of any
redeemable preferred stock of the Company; (g) any acquisition of
assets, not related to the Company's current business as an air
carrier, in a single transaction or a series of related
transactions exceeding $50 million adjusted annually by the
consumer price index; or (h) any sale of the Company's capital
stock or securities convertible into capital stock of the Company
to any person if (i) at the time of issuance or (ii) assuming
conversion of all outstanding securities of the Company
convertible into capital stock, such person or entity would
beneficially own at least 20% of the capital stock of the
Company.
Anti-takeover Provisions in Certificate of Incorporation
and By-laws; Rights Plan
The Certificate of Incorporation and the By-laws contain
provisions that authorize the Board of Directors to issue
preferred stock without stockholder approval, prohibit action by
written consent of the stockholders, authorize only the Chairman
of the Board of Directors or a majority of the Board of Directors
to call special meetings of the stockholders and require advance
notice for director nominations. These provisions of the
Certificate of Incorporation and By-laws and the Blocking
Coalition Provisions, as well as federal laws limiting foreign
ownership of U.S. flag carriers and the prohibition on certain
business combinations contained in Section 203 of the DGCL, could
have the effect of delaying, deferring or preventing a change in
control or the removal of existing management. In addition, the
Board of Directors declared a dividend distribution of one right
(a "Right") for each outstanding share of Common Stock and
Employee Preferred Stock and made such Right payable to holders
of record as of the close of business on January 12, 1996, and
thereafter each share of Common Stock or Employee Preferred Stock
issued by the Company has had one Right attendant to it. The
Rights are intended to protect the Company's stockholders from
certain non-negotiated takeover attempts that present the risk of
a change of control on terms that may be less favorable to the
Company's stockholders than would be available in a transaction
negotiated with and approved by the Board of Directors of the
Company. See "Description of Capital Stock--Rights Plan" and
"Certain Provisions of the Certificate of Incorporation, the
By-laws and Delaware Law" below, and "Business--Regulatory
Matters--Foreign Ownership of Shares" in the 1997 10-K.
Certain Potential Future Earnings Charges
There are a number of uncertainties relating to agreements
with employees of the Company, the resolution of which could
result in significant non-cash charges to the Company's future
operating results. Shares granted or purchased at a discount
under the ESIP will generally result in a charge equal to the
fair market value of shares
13
<PAGE>
granted plus the discount for shares purchased at the time when
such shares are earned. If the ESIP's target prices for the
Common Stock are realized, the minimum aggregate charge for the
years 1997 to 2002 (the 1997 and 1998 target prices having been
met) would be approximately $108.8 million based upon such target
prices and the number of shares of Common Stock and Employee
Preferred Stock outstanding at January 30, 1998. The charge for
any year, however, could be substantially higher if the then
market price of the Common Stock exceeds certain target prices.
On February 17, 1998, the first target price of $11.00 was
realized and therefore a grant will be made on July 15, 1998 in
an amount sufficient to increase the employee ownership by 2.0%
based on the then outstanding amount of Common Stock and Employee
Preferred Stock. Based on the number of shares of Common Stock
and Employee Preferred Stock outstanding at January 30, 1998 and
taking into account a credit with respect to the Company's
required contribution, the net contribution would be 1,109,722
shares. In addition, on March 4, 1998, the average market price
of the Company's Common Stock over a 30-day period exceeded the
$12.10 target price necessary to earn the 1998 grant. As a
result, on July 15, 1998, the Company will be required to make an
additional contribution to the relevant employee trusts based on
the then outstanding amount of its Common Stock and Employee
Preferred Stock in an amount sufficient to increase the employee
ownership by 1.5%. Based on the number of outstanding shares of
Common Stock and Employee Preferred Stock at January 30, 1998,
that contribution would be 1,172,354 shares. As a result of the
grants earned in 1998, an aggregate non-cash charge was recorded
in the first quarter of 1998 in the amount of $26.5 million in
connection with such issuance. However, the actual number of
shares and the actual charge will not be known until the shares
are issued on July 15, 1998. See "Business--Employees" in the
1997 10-K.
Fresh Start Reporting
In connection with the '95 Reorganization, the Company
adopted fresh start reporting in accordance with the American
Institute of Certified Public Accountants' Statement of Position
90-7 "--Financial Reporting by Entities in Reorganization Under
the Bankruptcy Code." The fresh start reporting common equity
value of the Company was determined by the Company, with the
assistance of its financial advisors, to be approximately $270.0
million based, in part, on assumptions as to future results of
operations. The carrying value of the Company's assets does not
reflect historical cost but rather reflects current values
determined by the Company as of the '95 Effective Date of the '95
Reorganization (including values for intangible assets such as
routes, gates and slots of approximately $458.4 million). The
difference between (i) the equity valuation of the Company plus
the estimated fair market value of the Company's liabilities and
(ii) the estimated fair market value of its identifiable assets
was allocated to "reorganization value in excess of amounts
allocable to identifiable assets" in the amount of approximately
$839.1 million. In future periods, these intangible assets will
be evaluated for recoverability based upon estimated future cash
flows. If expectations are not substantially achieved, charges to
future operations for impairment of these assets might be
required and such charges could be material. Due to the
significant adjustments relating to the '95 Reorganization and
the adoption of fresh start reporting, the pre-reorganization
consolidated financial statements are not comparable to the
post-reorganization consolidated financial statements. A vertical
black line is shown in the Consolidated Financial Statements in
the 1997 10-K to separate the Company's post-reorganization
Consolidated Financial Statements from its pre-'95 Reorganization
consolidated financial statements since they have not been
prepared on a consistent basis of accounting. See "Management's
Discussion and Analysis of Financial Condition and Results of
Operations" and Note 19 to the Consolidated Financial Statements
in the 1997 10-K.
In the fourth quarter of 1996, the Company reported a
special charge of $26.7 million relating to the write-down of the
carrying value of the Company's JFK-Athens route authority,
reflecting the Company's decision to terminate service on such
route after April 18, 1997.
Risk Factors Related to the Industry
Competition
The airline industry operates in an intensely competitive
environment. The Company competes with one or more major airlines
on most of its routes (including on all routes between major
cities) and with various forms of surface transportation. The
airline industry is also cyclical due to, among other things, a
close relationship of yields
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and traffic to general U.S. and worldwide economic conditions.
Small fluctuations in passenger revenue per available seat mile
("RASM") and cost per available seat mile ("CASM") can have a
significant impact on the Company's financial results. Airline
profit levels are highly sensitive to, and during recent years
have been adversely affected by, among other things, changes in
fuel costs, fare levels and passenger demand. Vigorous price
competition exists, and the Company and its competitors have
frequently offered sharply reduced discount fares in many
markets. Airlines, including TWA, use discount fares and other
promotions to stimulate traffic during normally slack travel
periods, to generate cash flow and to increase relative market
share in selected markets. The Company has often elected to
initiate or match discount or promotional fares in certain
markets in order to compete vigorously in those discounted
markets or to stimulate traffic. Passenger demand and fare levels
have also been affected adversely by, among other factors, the
state of the economy and international events.
The airline industry has consolidated as a result of
mergers and liquidations and more recently through alliances, and
further consolidation may occur in the future. This consolidation
has, among other things, enabled certain of the Company's major
competitors to expand their international operations and increase
their domestic market presence. Additionally, many of the major
U.S. carriers have announced plans for alliances with other major
U.S. carriers. Such alliances could further intensify the
competitive environment. In addition, certain of the Company's
competitors have in recent years established alliances with one
or more large foreign carriers, allowing those competitors to
strengthen their overall operations by, among other things,
transporting passengers connecting with or otherwise traveling on
the alliance carriers. Although the Company has established a
code share arrangement with one foreign carrier and has filed an
application with the Department of Transportation (the "DOT") to
establish an alliance with another foreign carrier, it does not
have an alliance with a large foreign carrier.
The emergence and growth of low-cost, low-fare carriers in
domestic markets represent an intense competitive challenge for
the Company, which has higher operating costs than many of such
low-fare carriers and fewer financial resources than many of its
major competitors. In many cases, such low-cost carriers have
initiated or triggered price discounting. In part as a result of
the industry consolidation referred to above, aircraft, skilled
labor and gates at most airports continue to be readily available
to start-up carriers. To the extent new carriers or other lower
cost competitors enter markets in which the Company operates,
such competition could have a material adverse effect on the
Company. Certain of the traditional carriers that compete with
the Company have implemented, or are in the process of
implementing, measures to reduce their operating costs, including
the creation of low-cost regional jet airline affiliates. In
addition, the Company is more highly leveraged and has
significantly less liquidity (and in certain cases, a higher cost
structure) than certain of its competitors, several of which have
available lines of credit, significant unencumbered assets and/or
greater access to capital markets. Accordingly, the Company may
be less able than certain of its competitors to withstand a
prolonged recession in the airline industry or prolonged periods
of competitive pressure.
Demand for air transportation has historically tended to
mirror general economic conditions. During the most recent
economic recession in the United States, the change in industry
capacity failed to mirror the reduction in demand for domestic
air transportation due primarily to continued delivery of new
aircraft. While in the period following such recession, industry
capacity leveled off, such capacity has again begun to expand.
The Company expects that the airline industry will remain
extremely competitive for the foreseeable future.
Aircraft Fuel
Since fuel costs constitute a significant portion of the
Company's operating costs (approximately 15.6% in 1996 and
approximately 14.3% in 1997), significant increases in fuel costs
would materially and adversely affect the Company's operating
results. Fuel prices continue to be susceptible to, among other
factors, political events and market factors beyond the Company's
control, and the Company cannot predict near or longer-term fuel
prices. In the event of a fuel supply shortage resulting from a
disruption of oil imports or otherwise, higher fuel prices or
curtailment of scheduled service could result. During 1996, the
Company's average per gallon cost of fuel increased approximately
22.3% versus 1995, from approximately 57.0(cent) per gallon to
approximately 69.8(cent) per gallon. During 1997, the Company's
average per gallon cost of fuel decreased approximately 5.6%,
from approximately 69.8(cent) per gallon to approximately
65.9(cent) per gallon. During the first quarter of 1998, the
Company's average per gallon cost of fuel decreased approximately
25.0%, from approximately 74.1(cent) per gallon to
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approximately 55.6(cent) per gallon, over the same period in
1997. See "Management's Discussion and Analysis of Financial
Condition and Results of Operations" in the 1997 10-K and the
10-Q. A one-cent change in the cost per gallon of fuel (based on
consumption during 1997) impacts operating expense by
approximately $609,000 per month. Increases in fuel prices may
have a greater proportionate and more immediate impact on the
Company than many of its competitors because of the composition
of its fleet and because the Company does not currently maintain
substantial reserves of fuel required for its operations or
otherwise hedge the cost of anticipated purchases of fuel. See
"Business--Aircraft Fuel" in the 1997 10-K.
Regulatory Matters
The airline industry is subject to extensive federal and
international government regulations relating to airline safety,
security and scheduling, as well as to local, state, federal and
international environmental laws. Adoption of newly proposed
regulations relating to these matters could increase the
Company's cost of compliance with governmental regulations and
could therefore increase operating expenses and, in some cases,
restrict the operations of airlines, including the Company,
thereby adversely affecting the Company's results of operations.
During the last several years, the FAA has issued a number
of maintenance directives and other regulations relating to,
among other things, collision avoidance systems, airborne
windshear avoidance systems, noise abatement and increased
inspection requirements, including added requirements for aging
aircraft. The Company believes, based on its current fleet, that
it will incur substantial capital expenditures to comply with the
aging aircraft and noise abatement regulations. The Company
expects that a number of aircraft will be retired before major
aging aircraft modifications and noise compliance will be
required; however, required capital expenditures will vary
depending upon changes in the Company's fleet composition.
Management expects that the cost of compliance will be funded
through a combination of internally generated funds and
utilization of cost sharing and/or funding provisions under
certain lease agreements and loan agreements. See "--Risk Factors
Related to the Company--Liquidity; Substantial Indebtedness;
Capital Expenditure Requirements" above.
Additional laws and regulations have been proposed from
time to time that could significantly increase the cost of
airline operations by, for instance, imposing additional
requirements or restrictions on operations. For example, several
airports have recently sought to increase substantially the rates
charged to airlines, and the ability of airlines to contest such
increases has been restricted by federal legislation, DOT
resolutions and judicial decisions. In addition, laws and
regulations have also been considered from time to time that
would prohibit or restrict the ownership and/or transfer of
airline routes or takeoff and landing slots. Also, the award of
international routes to U.S. carriers (and their retention) is
regulated by treaties and related agreements between the United
States and foreign governments which are amended from time to
time. The Company cannot predict what laws and regulations will
be adopted or what changes to international air transportation
treaties will be effected, if any, or how they will affect the
Company. See "Business--Regulatory Matters" in the 1997 10-K.
Management believes that the Company benefited from the
expiration on December 31, 1995 of the aviation trust fund tax
(the "Ticket Tax"), which imposed certain taxes including a 10%
air passenger tax on tickets for domestic flights, a 6.25% air
cargo tax and a $6 per person international departure tax. The
Ticket Tax was reinstated on August 27, 1996 and expired again on
December 31, 1996. At the end of February 1997, the Ticket Tax
was reinstated effective March 7, 1997 through September 30,
1997. Congress has passed tax legislation reimposing and
significantly modifying the Ticket Tax, effective October 1,
1997. The legislation includes the imposition of new excise tax
and significant fee tax formulas over a multiple year period, an
increase in the international departure tax, the imposition of a
new arrivals tax, and the extension of the Ticket Tax to cover
items such as the sale of frequent flier miles. Management
believes that the reimposition and modification of the Ticket Tax
will have a negative impact on the Company, although neither the
amount of such negative impact nor the benefit previously
realized by its expiration can be precisely determined. However,
management believes that the recent tax legislation and any other
increases of the Ticket Tax will result in higher costs to the
Company and/or, if passed on to consumers in the form of
increased ticket prices, might have an adverse effect on
passenger traffic, revenue and/or margins. See
"Business--Regulatory Matters" in the 1997 10-K.
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THE COMPANY
TWA is the eighth largest U.S. air carrier (based on RPMs
for the full-year 1997), whose primary business is transporting
passengers, cargo and mail. During 1997, the Company carried
approximately 23.4 million passengers and flew approximately 25.1
billion RPMs. As of March 31, 1998, the Company provided
regularly scheduled jet service to 89 cities in the United
States, Mexico, Europe, the Middle East, Canada and the
Caribbean. As of March 31, 1998, the Company operated a fleet of
181 jet aircraft.
TWA's North American operations have a primarily domestic
hub at St. Louis and a domestic-international hub at JFK. TWA is
the predominant carrier at St. Louis, with approximately 360
scheduled daily departures as of March 31, 1998 and approximately
a 74.5% share of airline passenger enplanements in St. Louis for
the full year 1997, excluding all commuter flights. Given its
location in the center of the country, St. Louis is well-suited
to function as an omni-directional hub for both north-south and
east-west transcontinental traffic. Therefore, TWA believes it
can offer more frequencies and connecting opportunities to many
travelers in its key Midwestern markets than competing airlines.
TWA's international operations are concentrated at JFK,
from which TWA currently serves 26 domestic and international
cities with approximately 40 daily departures. JFK is both the
Company's and the industry's largest international gateway from
North America. As of March 31, 1998, the Company offered non-stop
flights from JFK to 8 cities in Europe and the Middle East as
well as 17 destinations in the United States and the Caribbean.
As described in the 1997 10-K, during 1997, the Company
implemented certain steps to refocus and improve the operating
and financial performance of its JFK operations.
TWA is a Delaware corporation organized in 1978 and is the
successor to the business of its predecessor corporation,
Transcontinental & Western Air, Inc., originally formed in 1934.
The Company's principal executive offices are located at One City
Centre, 515 N. Sixth Street, St. Louis, Missouri 63101, and its
telephone number is (314) 589-3000.
USE OF PROCEEDS
The Selling Holders will receive all of the net proceeds
from any sale of the Common Stock, and, accordingly, the Company
will receive none of the proceeds from the sales thereof.
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CAPITALIZATION
The following table sets forth the consolidated cash and
the capitalization of the Company as of March 31, 1998 and as
adjusted to give effect to the issuance on June 16, 1998 of the
Notes and the Equity Notes, the issuance on April 21, 1998 of the
April Notes and the conversion into Common Stock of the April
Equity Notes on July __, 1998 and the Equity Notes on July __,
1998. This information should be read in conjunction with the
Consolidated Financial Statements incorporated by reference in
this Prospectus.
March 31, 1998
---------------------
As
Actual Adjusted
------ --------
(in millions)
Cash and cash equivalents(1) .................... $ 346.1 $ 346.1
======== ========
Long-term debt and capital lease obligations
(net of unamortized discounts and including
current maturities, as applicable):(2)
10 1/4% Senior Secured Notes due 2003 ........ -- 14.5
11 3/8% Senior Secured Notes due 2003 ........ -- 43.2
11 3/8% Senior Notes due 2006 ................ 150.0 150.0
9.80% Airline Receivable Asset Backed
Notes, Series 1997 ........................ 100.0 100.0
11 1/2% Senior Secured Notes due 2004 ........ 138.4 138.4
12% Senior Secured Notes due 2002 ............ 43.5 43.5
8% IAM Backpay Notes ......................... 13.7 13.7
PBGC Notes ................................... 117.1 117.1
Various secured notes, 4.0% to 12.4%,
due 1997-2001 ............................. 36.7 36.7
Installment Purchase Agreements,
10.00% to 10.53%, due 2115-2003 ........... 115.3 115.3
Boeing Co. 757 Purchase Agreements,
11.85% to 12.38%, due 2015 ................ 147.9 147.9
IRS Deferral Note ............................ 4.8 4.8
Predelivery Financing Agreement .............. 6.4 6.4
Worldspan Note ............................... 31.2 31.2
Capital lease obligations .................... 211.1 211.1
-------- --------
Total long-term debt and capital
lease obligations ...................... 1,116.1 1,173.8
-------- --------
Stockholders' equity:
Preferred Stock, $0.01 par value;
137,500,000 shares authorized:
8% Preferred Stock, 4,025,000
shares authorized; 3,869,000 shares
issued and outstanding and as adjusted -- --
9 1/4% Preferred Stock, 1,725,000
shares authorized; 1,725,000 shares
issued and outstanding and as adjusted -- --
Employee Preferred Stock, $0.01 par value;
6,959,860 shares authorized;
6,020,145 shares issued and outstanding
and as adjusted(3) ......................... 0.1 0.1
Common Stock, $0.01 par value; 150,000,000
shares authorized; 51,946,129 shares
issued and outstanding and 56,583,464
shares as adjusted(4) ...................... 0.5 0.6
Additional paid-in capital ................... 687.8 731.2
Accumulated deficit .......................... (481.3) (481.3)
-------- --------
Total stockholders' equity ............. 207.1 250.6
-------- --------
Total capitalization ................... $1,323.2 $1,424.4
======== ========
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- ---------------
(1) Includes cash and cash equivalents held in the Company's
international operations and by its subsidiaries that, based
upon foreign monetary regulations and other factors, might
not be immediately available to the Company.
(2) Current maturities of long-term debt and capital lease
obligations at March 31, 1998 were $49.2 million and $36.6
million, respectively.
(3) Composed of 3,191,759 shares of the Company's IAM Preferred
Stock, 962,892 shares of the Company's IFFA Preferred Stock,
and 1,865,494 shares of the Company's ALPA Preferred Stock
distributed and allocated to employees through employee
stock ownership plans for the benefit of employees
represented by IAM and ALPA (collectively, the "Employee
Preferred Stock"). See "Description of Capital
Stock--Employee Preferred Stock."
(4) As adjusted includes [3,350,000] shares of Common Stock
issued upon conversion of the April Equity Notes and
[1,287,335] shares of Common Stock issued upon conversion of
the Equity Notes. Actual and as adjusted do not include
approximately (i) approximately 10.9 million shares of
Common Stock initially reserved for issuance upon conversion
of the 9 1/4% Cumulative Convertible Exchangeable Preferred
Stock, (ii) approximately 6.3 million shares of Common Stock
reserved for issuance upon exercise of warrants issued in
connection with the March 1997 offering of the Company's
50,000 Units, each consisting of (x) one 12% Senior Secured
Note due 2002, in the principal amount of $1,000, and (y)
one Redeemable Warrant to purchase 126.26 shares of Common
Stock at an exercise price of approximately $7.92 per share,
(iii) approximately 9.5 million shares of Common Stock
reserved for issuance upon conversion of the 8% Cumulative
Convertible Exchangeable Preferred Stock, (iv) approximately
3.7 million shares of Common Stock that may be issued upon
exercise of outstanding stock options granted to officers
and employees of the Company under the Key Employee Stock
Incentive Plan at prices ranging from $4.64 to $18.37 per
share and Common Stock issuable upon the exercise of
warrants, and (v) shares of Common Stock that may be granted
or sold at a discount to employees under the ESIP. See "Risk
Factors--Risk Factors Related to the Company--Corporate
Governance Provisions; Special Voting Arrangements" above
and "Business--Employees" in the 1997 10-K and the 10-Q.
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SELLING HOLDERS
The Registration Statement has been filed pursuant to Rule
415 under the Securities Act to afford the holders of the
securities offered hereby the opportunity to sell such securities
in a public transaction rather than pursuant to an exemption from
the registration and prospectus delivery requirements of the
Securities Act. In order for a Selling Holder to avail himself of
that opportunity, such holder must notify the Company in writing
of his intention to sell securities and request the Company to
file a supplement to this Prospectus or an amendment to the
Registration Statement, if required, identifying such holder as a
Selling Holder and disclosing such other information concerning
the Selling Holder and the securities to be sold as may then be
required by the Securities Act and the rules of the Commission.
No offer or sale pursuant to this Prospectus may be made by any
holder until such a request has been made and until any such
supplement has been filed or any such amendment has become
effective. The holders of securities who have made such a request
and as to which any such required supplement or amendment has
been filed or become effective are referred to herein as "Selling
Holders."
As of the date of this Prospectus, no holder of securities
has made such a request and, accordingly, no Selling Holders are
named herein. The Company will from time to time supplement or
amend this Prospectus to reflect the required information
concerning any Selling Holder.
20
<PAGE>
21
<PAGE>
DESCRIPTION OF CAPITAL STOCK
Pursuant to the Company's Certificate of Incorporation, the
Company has the authority to issue 287.5 million shares of
capital stock, consisting of 150 million shares of Common Stock
and 137.5 million additional shares of preferred stock. The
Certificate of Incorporation authorizes the Board of Directors to
establish one or more series of preferred stock and to establish
such relative voting, dividend, redemption, liquidation,
conversion and other powers, preferences, rights, qualifications,
limitations and restrictions as the Board of Directors may
determine without further approval of the stockholders of the
Company. The issuance of preferred stock by the Board of
Directors could, among other things, adversely affect the voting
power of the holders of Common Stock and, under certain
circumstances, make it more difficult for a person or group to
gain control of the Company. See "Certain Provisions of the
Certificate of Incorporation, the By-laws and Delaware Law."
The issuance of any series of preferred stock, and the
relative powers, preferences, rights, qualifications, limitations
and restrictions of such series, if and when established, will
depend upon, among other things, the future capital needs of the
Company, the then existing market conditions and other factors
that, in the judgment of the Board of Directors, might warrant
the issuance of preferred stock. At the date of this Prospectus,
there are no plans, agreements or understandings relative to the
issuance of any additional series of preferred stock other than
the Series A Preferred Stock issuable pursuant to the Rights.
Description of Common Stock
The holders of the Common Stock are entitled to one vote
per share on all matters voted on by stockholders, including
elections of directors, and, except for the voting rights of the
holders of Employee Preferred Stock (who are entitled to elect a
total of four directors to the Board) and, under certain
circumstances, the 9 1/4% Preferred Stock and 8% Preferred Stock,
and as otherwise required by law or provided in any resolution
adopted by the Board of Directors with respect to any series of
the preferred stock, the holders of shares of Common Stock
exclusively possess all voting power. The Certificate of
Incorporation does not provide for cumulative voting in the
election of directors, which means that the holders of a majority
of the shares entitled to vote at a meeting at which a quorum is
present can elect all of the directors (except that the holders
of the shares of Employee Preferred Stock are exclusively
entitled to elect four labor directors). Subject to any
preferential rights of the 8% Preferred Stock, the 9 1/4%
Preferred Stock or any other outstanding series of Preferred
Stock entitled to vote in the election of directors, the holders
of Common Stock are entitled to such dividends as may be declared
from time to time by the Board of Directors from funds available
therefor, and upon liquidation are entitled to receive pro rata
all assets of the Company available for distribution to such
holders. The holders of Common Stock have no preemptive rights
and no rights to convert their shares of Common Stock into any
other security. It is not currently anticipated that dividends
will be paid on the Common Stock in the foreseeable future. All
outstanding shares of Common Stock are fully paid and
nonassessable, and the shares of Common Stock issuable upon
conversion of the 9 1/4% Preferred Stock, the 8% Preferred Stock,
the April Equity Notes and, if issued, upon conversion of the
9 1/4% Convertible Subordinated Debentures due 2007 (the "2007
Debentures") and the 8% Convertible Subordinated Debentures due
2006 (the "2006 Debentures") and issuable in exchange for
Employee Preferred Stock if and when such Preferred Stock is
released from trust, will be, upon issuance, fully paid and
nonassessable. As of May 29, 1998, 52,242,014 shares of Common
Stock were issued and outstanding and were held by approximately
21,581 holders of record.
Rights Plan
The Board of Directors of the Company declared a dividend
distribution of one Right for each outstanding share of Common
Stock and Employee Preferred Stock (collectively, the "Voting
Stock") payable to holders of record as of the close of business
on January 12, 1996 (the "Record Date") and, thereafter, each
share of Voting Stock issued by the Company has had one Right
attendant to it. Each Right entitles the holder to purchase,
after the Distribution Date (as defined below), from the Company
one one-hundredth of a share of Series A Preferred Stock of the
Company at a price of $47.50 (the "Purchase Price"). The
description and terms of the Rights are set forth in a Rights
Agreement, dated as of December 19, 1995 between the Company and
American Stock Transfer & Trust Company, as Rights Agent (the
"Rights Agent") as supplemented. The Rights Plan is set forth in
full in the Rights Agreement and the description thereof herein
is qualified in its entirety by reference to such Rights
Agreement.
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<PAGE>
Until the earlier to occur of (a) the tenth day after
public announcement that any person or group (other than the
Company, any of its subsidiaries or any employee benefit plan of
the foregoing) has become the beneficial owner of at least 15% of
the Company's Voting Stock (other than pursuant to a "Permitted
Offer," as defined below) and (b) the tenth business day after
the date of the commencement of a tender or exchange offer (other
than a Permitted Offer) by any person which would, if
consummated, result in such person becoming the beneficial owner
of at least 20% of the Voting Stock (the earlier of such dates
being hereinafter called the "Distribution Date"), the Rights
will be evidenced, with respect to any of the Voting Stock
certificates outstanding as of the Record Date, by such Voting
Stock certificates.
Each share of Voting Stock issued or delivered by the
Company after the Record Date but prior to the earlier of the
Distribution Date or the expiration of the Rights shall be
accompanied by one Right.
The Rights Agreement provides that, until the Distribution
Date, the Rights will be transferred with and only with the
Voting Stock. Until the Distribution Date (or earlier redemption
or expiration of the Rights), the surrender or transfer of any
certificates for Voting Stock in respect of which Rights have
been issued will also constitute the transfer of the Rights
associated with the Voting Stock represented by such
certificates. As soon as practicable after the Distribution Date,
separate certificates evidencing the Rights (the "Right
Certificates") will be mailed to holders of record of the Voting
Stock as of the close of business on the Distribution Date and
such separate Right Certificates alone will evidence the Rights.
No Right is exercisable at any time prior to the
Distribution Date. The Rights will expire on January 12, 2006
unless earlier exchanged or redeemed by the Company as described
below. Until a Right is exercised, the holder thereof, as such,
will have no rights as a stockholder of the Company, including
without limitation the right to vote or to receive dividends.
Upon exercise by a holder of its purchase right, each Right
will be converted into one one-hundredth of a share of the Series
A Preferred Stock. Holders of shares of Series A Preferred Stock
are entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available therefor, quarterly
dividends in an amount per share equal to the greater of (a)
$1.00 and (b) 100 times the aggregate per share amount of all
cash dividends or other distributions (other than dividends
payable solely in shares of Common Stock), declared on the Common
Stock since the first dividend payment date with respect to the
Series A Preferred Stock. Dividends payable on the Series A
Preferred Stock are cumulative. In addition, in the event the
Company enters into any consolidation, merger, combination or
other transaction in which shares of Common Stock are exchanged
for or changed into other stock, securities, cash or other
consideration, shares of Series A Preferred Stock shall be
similarly exchanged for or changed into 100 times the aggregate
per share amount of stock, securities, cash or other
consideration.
Subject to the rights of holders of the 9 1/4% Preferred
Stock and the 8% Preferred Stock, holders of shares of Series A
Preferred Stock are entitled to 100 votes per share on all
matters submitted to a vote of the stockholders of the Company,
voting together as a single class, except as otherwise required
by applicable law. In the event dividends payable on the Series A
Preferred Stock shall be in arrears in an amount equal to six
quarterly payments, all holders of the Series A Preferred Stock,
together with other holders of preferred stock entitled to vote,
shall, voting together as a single class, be entitled to elect
one director to the Company's Board of Directors (in addition to
any directors that holders of preferred stock may otherwise be
entitled to elect).
In the event that any person or group (an "Acquiring
Person") becomes the beneficial owner of at least 15% of the
Company's Voting Stock, then each Right (other than Rights
beneficially owned by the Acquiring Person and certain affiliated
persons) will entitle the holder to elect to receive, without
payment of the Purchase Price and in lieu of Series A Preferred
Stock, a number of shares of the Company's Common Stock having a
market value equal to the Purchase Price. The term "Acquiring
Person" does not include (i) the Company, any of its subsidiaries
or any employee benefit plan of the foregoing, except for any
such employee benefit plan acting in concert with a third party
(other than another employee benefit plan of the Company), or
(ii) any person or group which becomes the beneficial owner of at
least 15% of the Voting Stock pursuant to a "Permitted Offer" (as
defined below).
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<PAGE>
"Permitted Offer" means a tender or exchange offer by a
person or entity for all outstanding shares of Voting Stock,
which is made at a price and on such other terms determined by at
least a majority of the Continuing Directors (as defined below)
to be in the best interests of the Company and its stockholders.
In the event that, after any person has become an Acquiring
Person, (i) the Company is involved in a merger or other business
combination in which the Company is not the surviving corporation
or its Voting Stock is exchanged for other securities or assets
or (ii) the Company and/or one or more of its subsidiaries sell
or otherwise transfer assets or earning power aggregating more
than 50% of the assets or earning power of the Company and its
subsidiaries, taken as a whole, then each Right will entitle the
holder to purchase, for the Purchase Price, a number of shares of
common stock of the surviving corporation or the issuer of any
securities into which the Voting Stock is converted or the party
receiving the greatest portion of the assets or earning power, as
the case may be, having a market value of two times the Purchase
Price.
At any time after any person or entity has become an
Acquiring Person (but before any person or entity becomes the
beneficial owner of at least 50% of the Voting Stock), a majority
of the Company's Continuing Directors may exchange all or part of
the Rights (other than the Rights beneficially owned by the
Acquiring Person and certain affiliated persons) for shares of
Common Stock at an exchange ratio of one share of Common Stock
per Right.
"Continuing Director" means (i) any member of the Board of
Directors who was a member of the Board prior to the time an
Acquiring Person becomes such or (ii) any person subsequently
elected to the Board if he is recommended or approved by a
majority of the Continuing Directors or, in the case of a
successor to a director elected by holders of a series of
Employee Preferred Stock, if such person is elected pursuant to
the applicable terms of such Employee Preferred Stock. Continuing
Directors do not include an Acquiring Person, an affiliate or
associate of an Acquiring Person or any representative or nominee
of the foregoing.
The Company may redeem the Rights, in whole but not in
part, at a price of $.01 per Right at any time prior to the close
of business on the tenth day after public announcement that any
person or group has become an Acquiring Person (subject to
extension by a majority of the Continuing Directors).
After the Distribution Date, the Rights Agreement may be
amended in any respect that does not adversely affect the Rights
holders (other than any Acquiring Person and certain affiliated
persons). In addition, after any person has become an Acquiring
Person, the Rights Agreement may be amended only with the
approval of a majority of the Continuing Directors.
Description of Employee Preferred Stock
Pursuant to the '95 Reorganization, the Company issued an
aggregate of 6,425,118 shares of Employee Preferred Stock to
employee stock trusts for the benefit of certain domestic
employees of the Company then represented by ALPA, IFFA and IAM
pursuant to the terms of the '94 Labor Agreements (collectively,
the "Employee Stock Trusts"). The Employee Preferred Stock was
issued in three series designated ALPA Preferred Stock, IAM
Preferred Stock and IFFA Preferred Stock. Except for an exclusive
right to elect a certain number of directors to the Board of
Directors and the liquidation preference described below under
"--Liquidation Preference and Other Rights," the Employee
Preferred Stock is the functional equivalent of Common Stock. The
Employee Preferred Stock is junior to the 9 1/4% Preferred Stock
and the 8% Preferred Stock as to the payment of dividends and the
distribution of assets upon liquidation, dissolution or winding
up of the Company ("Liquidation").
Dividends
Subject to the issuance by the Company of preferred stock
with senior rights (including the 9 1/4% Preferred Stock and the
8% Preferred Stock), the holders of the Employee Preferred Stock
are entitled to receive, when, as and if declared by the Board of
Directors out of funds legally available therefor, dividends
payable in cash, stock or otherwise. No dividends may be paid on
the Common Stock unless an equivalent dividend is paid on the
Employee Preferred Stock, and no dividends may be paid on the
Employee Preferred Stock unless an equivalent dividend is
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paid on the Common Stock. It is not currently anticipated that
dividends will be paid on the Employee Preferred Stock in the
foreseeable future.
Liquidation Preference and Other Rights
Subject to the issuance by the Company of preferred stock
with senior rights (including the 9 1/4% Preferred Stock and the
8% Preferred Stock), upon any liquidation of the Company, holders
of the Employee Preferred Stock will be entitled to a liquidation
preference equal to $.01 per share from the Company's net assets
before any amounts are paid to, or on account of, the holders of
Common Stock, and thereafter the remaining net assets of the
Company will be distributed pro rata to the holders of the
Employee Preferred Stock, the Common Stock and other equity
securities of the Company that rank on a parity with such stock
and with respect to such rights, all in accordance with their
respective rights and interests. The Employee Preferred Stock
does not have redemption rights.
Automatic Conversion
Each share of Employee Preferred Stock will automatically
convert into one share of Common Stock upon the withdrawal of
such share of Employee Preferred Stock from the Employee Stock
Trust in which such share is held.
Voting
So long as any shares of ALPA Preferred Stock are
outstanding, the holders of the ALPA Preferred Stock are entitled
to one vote per share (i) on each matter submitted to a vote at a
meeting of stockholders other than the election of directors and
(ii) for the ALPA Director (defined below) to be elected at an
annual meeting of stockholders. Such holders have the exclusive
right to elect to the Board one director (the "ALPA Director").
So long as any shares of IFFA Preferred Stock are
outstanding, the holders of the IFFA Preferred Stock are entitled
to one vote per share (i) on each matter submitted to a vote at a
meeting of stockholders other than the election of directors and
(ii) for the IFFA Director (defined below) to be elected at an
annual meeting of stockholders. Such holders have the exclusive
right to elect to the Board one director (the "IFFA Director").
So long as any shares of IAM Preferred Stock are
outstanding, the holders of the IAM Preferred Stock are entitled
to one vote per share (i) on each matter submitted to a vote at a
meeting of stockholders other than the election of directors and
(ii) for the IAM Directors (defined below) to be elected at an
annual meeting of stockholders. Such holders have the exclusive
right to elect to the Board two directors (the "IAM Directors").
Amendment
The Certificate of Designations, Preferences and Rights
relating to each series of Employee Preferred Stock may be
amended only upon the unanimous approval of the holders of the
outstanding shares of such series of Employee Preferred Stock.
Description of the 8% Preferred Stock
The 8% Preferred Stock ranks on a parity with the 9 1/4%
Preferred Stock and on a parity with all other preferred stock,
the terms of which expressly provide that it ranks on a parity
with the 8% Preferred Stock with respect to dividends and amounts
payable upon Liquidation. The 8% Preferred Stock ranks senior to
the Common Stock, the Series A Preferred Stock, if issued, and
the Employee Preferred Stock with respect to payment of dividends
and amounts payable upon Liquidation.
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Dividends
The holders of the 8% Preferred Stock are entitled to
receive cumulative cash dividends at the rate of 8% per annum
(equivalent to $4.00 per share per annum), when, as and if
declared by the Board of Directors out of funds legally available
therefor. Dividends and liquidated damages, if any, are payable
quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year (and, in the case of any accrued but
unpaid dividends, at such additional times and for such interim
periods, if any, as determined by the Board of Directors) to the
holders of record on the record dates, which shall be not more
than 30 days nor less than 10 days preceding the payment dates.
Dividends on the 8% Preferred Stock commenced to accrue on March
18, 1996.
If dividends are not paid in full upon the 8% Preferred
Stock and any other preferred stock ranking on a parity as to
dividends with the 8% Preferred Stock, all dividends declared
upon shares of 8% Preferred Stock and such other preferred stock
ranking on a parity as to dividends with the 8% Preferred Stock
will be declared pro rata so that in all cases the amount of
dividends declared per share on the 8% Preferred Stock and such
other preferred stock bear to each other the same ratio that
accrued and unpaid dividends per share on the shares of the 8%
Preferred Stock and such other preferred stock bear to each
other. Except as set forth above, unless full cumulative
dividends or the 8% Preferred Stock have been paid and funds set
aside, and all liquidated damages, if any, paid, dividends (other
than dividends paid solely in Common Stock or other stock ranking
junior as to dividends and liquidation preference) may not be
paid or declared and set aside for payment and other
distributions may not be made upon the Common Stock or on any
other stock of the Company ranking junior to or on a parity with
the 8% Preferred Stock as to dividends and liquidation
preference. Under such circumstances, such stock may not be
redeemed, purchased, or otherwise acquired for any consideration
by the Company.
Conversion Rights
Each share of 8% Preferred Stock may be converted at any
time at the option of the holder, unless previously redeemed or
exchanged, into fully paid, nonassessable shares of Common Stock
at an initial conversion price of $20.269 per share of Common
Stock (equivalent to a conversion rate of approximately 2.467
shares of Common Stock for each share of 8% Preferred Stock),
subject to adjustments in certain circumstances. The right to
convert 8% Preferred Stock called for redemption will expire at
the close of business on the fifth business day prior to the
redemption date. Whenever the Company issues shares of Common
Stock upon conversion of 8% Preferred Stock, the Company will,
subject to certain conditions, issue, together with each share of
Common Stock, one Right, entitling the holder to purchase one
one-hundredth of a share of Series A Preferred Stock under
certain circumstances.
No fractional shares of Common Stock will be issued upon
conversion but, in lieu thereof, an appropriate amount will be
paid in cash based on the closing price of the Common Stock on
the last trading day before the conversion date. The conversion
price is subject to adjustment upon the occurrence of certain
events.
Optional Redemption by the Company
The 8% Preferred Stock may not be redeemed prior to March
15, 1999. On or after March 15, 1999, the 8% Preferred Stock may
be redeemed, in whole or in part, at the option of the Company,
at a redemption price of $52.80 in 1999 and at a redemption price
decreasing by $0.40 increments each March 15 thereafter until
2006, from which time the redemption price shall be and remain
$50.00, in each case, plus accrued and unpaid dividends thereon
and liquidated damages, if any, to the date fixed for redemption.
Liquidation Rights
Upon any Liquidation of the Company, and after provision is
made for any preferential amounts to which the holders of any
senior preferred stock may be entitled, holders of 8% Preferred
Stock will be entitled to receive from the Company's assets
available for distribution to all stockholders $50.00 per share
plus all accrued and unpaid dividends through the date of
Liquidation, whether or not declared, and liquidated damages, if
any, before any distribution is made on the Employee Preferred
Stock, Common Stock, Series A Preferred Stock (if issued) or any
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other capital stock ranking junior to the 8% Preferred Stock and
will be entitled to such amount on a parity with the 9 1/4%
Preferred Stock and every other series of the Company's preferred
stock that ranks on a parity with the 8% Preferred Stock in
respect of distributions of assets upon Liquidation. Neither a
consolidation or merger of the Company with another corporation
nor a sale or transfer of all or substantially all of the
Company's assets for cash, securities or other property will be
considered a Liquidation for these purposes.
Voting Rights
Except as indicated below or otherwise required by law,
holders of 8% Preferred Stock have no voting rights. If at any
time the equivalent of six quarterly dividends payable on the 8%
Preferred Stock are accrued and unpaid, the holders of all
outstanding shares of 8% Preferred Stock and any stock ranking on
a parity as to dividends with the shares of 8% Preferred Stock
and having similar voting rights then exercisable, voting
separately as a class without regard to series, will be entitled
to elect at the next annual or special meeting of the
stockholders of the Company, two directors to serve until all
dividends accumulated and unpaid have been paid or declared and
funds set aside to provide for payment in full. In exercising any
such vote, each outstanding share of 8% Preferred Stock will be
entitled to one vote, excluding shares held by the Company or any
entity controlled by the Company, which shares shall have no
vote.
Exchange Provisions
Provided that all accrued and unpaid dividends and
liquidated damages, if any, then owing on the 8% Preferred Stock
have been paid, the 8% Preferred Stock is exchangeable in whole,
but not in part, at the Company's option for the Company's 2006
Debentures on any dividend payment date, beginning on March 15,
1998, at the rate of $50.00 principal amount thereof for each
share of 8% Preferred Stock outstanding at the time of exchange.
The 2006 Debentures are issuable in denominations of $1,000 and
integral multiples thereof. The 2006 Debentures, if issued, will
be unsecured, subordinated obligations of the Company and will
mature on March 15, 2006. The 2006 Debentures are convertible
into fully paid, nonassessable shares of Common Stock at a rate
of $20.269 per share, subject to adjustment, and may be redeemed
on and after March 15, 1999 at the option of the Company.
Description of the 9 1/4% Preferred Stock
The 9 1/4% Preferred Stock ranks on a parity with the 8%
Preferred Stock and on a parity with all other preferred stock,
the terms of which expressly provide that it ranks on a parity
with the 9 1/4% Preferred Stock with respect to dividends and
amounts payable upon Liquidation. The 9 1/4% Preferred Stock
ranks senior to the Common Stock, the Series A Preferred Stock,
if issued, and the Employee Preferred Stock with respect to
payment of dividends and amounts payable upon Liquidation.
Dividends
The holders of the 9 1/4% Preferred Stock are entitled to
receive cumulative cash dividends at the rate of 9 1/4% per annum
(equivalent to $4.625 per share per annum), when, as and if
declared by the Board of Directors out of funds legally available
therefor. Dividends and liquidated damages, if any, are payable
quarterly in arrears on March 15, June 15, September 15 and
December 15 of each year (and, in the case of any accrued but
unpaid dividends, at such additional times and for such interim
periods, if any, as determined by the Board of Directors) to the
holders of record on the record dates, which shall be not more
than 30 days nor less than 10 days preceding the payment dates.
Dividends on the 9 1/4% Preferred Stock commenced accruing on
December 2, 1997.
If dividends are not paid in full upon the 9 1/4% Preferred
Stock and any other preferred stock ranking on a parity as to
dividends with the 9 1/4% Preferred Stock, all dividends declared
upon shares of 9 1/4% Preferred Stock and such other preferred
stock ranking on a parity as to dividends with the 9 1/4%
Preferred Stock will be declared pro rata so that in all cases
the amount of dividends declared per share on the 9 1/4%
Preferred Stock and such other preferred stock bear to each other
the same ratio that accrued and unpaid dividends per share on the
shares of the 9 1/4% Preferred Stock and such other preferred
stock bear to each other. Except as set forth above, unless full
cumulative dividends or the 9 1/4% Preferred Stock have been paid
and funds set aside, and all liquidated damages, if
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any, paid, dividends (other than dividends paid solely in Common
Stock or other stock ranking junior as to dividends and
liquidation preference) may not be paid or declared and set aside
for payment and other distributions may not be made upon the
Common Stock or on any other stock of the Company ranking junior
to or on a parity with the 9 1/4% Preferred Stock as to dividends
and liquidation preference. Under such circumstances, such stock
may not be redeemed, purchased, or otherwise acquired for any
consideration by the Company.
Conversion Rights
Each share of 9 1/4% Preferred Stock may be converted at
any time at the option of the holder, unless previously redeemed
or exchanged, into fully paid, nonassessable shares of Common
Stock at an initial conversion price of $7.90 per share of Common
Stock (equivalent to a conversion rate of approximately 6.329
shares of Common Stock for each share of 9 1/4% Preferred Stock),
subject to adjustments in certain circumstances. The right to
convert 9 1/4% Preferred Stock called for redemption will expire
at the close of business on the second business day prior to the
redemption date. Whenever the Company issues shares of Common
Stock upon conversion of 9 1/4% Preferred Stock, the Company
will, subject to certain conditions, issue, together with each
share of Common Stock, one Right, entitling the holder to
purchase one one-hundredth of a share of Series A Preferred Stock
under certain circumstances.
No fractional shares of Common Stock will be issued upon
conversion but, in lieu thereof, an appropriate amount will be
paid in cash based on the closing price of the Common Stock on
the last trading day before the conversion date. The conversion
price is subject to adjustment upon the occurrence of certain
events.
Optional Redemption by the Company
The 9 1/4% Preferred Stock may not be redeemed prior to
December 15, 2000. On or after December 15, 2000, the 9 1/4%
Preferred Stock may be redeemed, in whole or in part, at the
option of the Company, at a redemption price of $53.24 in 2000
and at a redemption price decreasing by approximately $0.46 each
December 15 thereafter until 2007, from which time the redemption
price shall be and remain $50.00, in each case, plus accrued and
unpaid dividends thereon and liquidated damages, if any, to the
date fixed for redemption.
Liquidation Rights
Upon any Liquidation of the Company, and after provision is
made for any preferential amounts to which the holders of any
senior preferred stock may be entitled, holders of 9 1/4%
Preferred Stock will be entitled to receive from the Company's
assets available for distribution to all stockholders $50.00 per
share plus all accrued and unpaid dividends through the date of
Liquidation, whether or not declared, and liquidated damages, if
any, before any distribution is made on the Employee Preferred
Stock, Common Stock, Series A Preferred Stock (if issued) or any
other capital stock ranking junior to the 9 1/4% Preferred Stock
and will be entitled to such amount on a parity with the 8%
Preferred Stock and every other series of the Company's preferred
stock that ranks on a parity with the 9 1/4% Preferred Stock in
respect of distributions of assets upon Liquidation. Neither a
consolidation or merger of the Company with another corporation
nor a sale or transfer of all or substantially all of the
Company's assets for cash, securities or other property will be
considered a Liquidation for these purposes.
Voting Rights
Except as indicated below or otherwise required by law,
holders of 9 1/4% Preferred Stock have no voting rights. If at
any time the equivalent of six quarterly dividends payable on the
9 1/4% Preferred Stock are accrued and unpaid, the holders of all
outstanding shares of 9 1/4% Preferred Stock and any stock
ranking on a parity as to dividends with the shares of 9 1/4%
Preferred Stock and having similar voting rights then
exercisable, voting separately as a class without regard to
series, will be entitled to elect at the next annual or special
meeting of the stockholders of the Company, two directors to
serve until all dividends accumulated and unpaid have been paid
or declared and funds set aside to provide for payment in full.
In exercising any such vote, each outstanding share of 9 1/4%
Preferred Stock will be entitled to one vote, excluding shares
held by the Company or any entity controlled by the Company,
which shares shall have no vote.
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Exchange Provisions
Provided that all accrued and unpaid dividends and
liquidated damages, if any, then owing on the 9 1/4% Preferred
Stock have been paid, the 9 1/4% Preferred Stock is exchangeable
in whole, but not in part, at the Company's option, for the 2007
Debentures on any dividend payment date, beginning on December
15, 1999, at the rate of $50.00 principal amount thereof for each
share of 9 1/4% Preferred Stock outstanding at the time of
exchange. The 2007 Debentures are issuable in denominations of
$1,000 and integral multiples thereof. The 2007 Debentures, if
issued, will be unsecured, subordinated obligations of the
Company and will mature on December 15, 2007. The 2007 Debentures
are convertible into fully paid, nonassessable shares of Common
Stock at a rate of $7.90 per share and may be redeemed on and
after December 15, 2000 at the option of the Company.
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CERTAIN PROVISIONS OF THE CERTIFICATE OF INCORPORATION,
THE BY-LAWS AND DELAWARE LAW
The Certificate of Incorporation and the By-laws contain
certain provisions that could make more difficult the acquisition
of the Company by means of a tender offer, a proxy contest or
otherwise. These provisions are expected to discourage certain
types of coercive takeover practices and inadequate takeover bids
and to encourage persons seeking to acquire control of the
Company first to negotiate with the Company. The Company believes
that the benefits of increased protection of the Company's
potential ability to negotiate with the proponent of an
unfriendly or unsolicited proposal to acquire or restructure the
Company outweigh the disadvantages of discouraging such proposals
because, among other things, negotiation of such proposals could
result in an improvement of their terms. In addition, pursuant to
the '95 Reorganization and in connection with the adoption of the
'94 Labor Agreements, the Company adopted certain amendments,
both to the Certificate of Incorporation and the By-laws,
relating to corporate governance matters. These amendments are
designed to enhance the input of the Company's union employees or
the directors nominated by them in the governance of the Company
and to limit the ability to change the provisions of the
Certificate of Incorporation in general and the By-laws in
particular without broad support from the Company's voting
stockholders. Such provisions will also make it more difficult to
enact any change in the By-laws or to take any of the specified
actions, if such changes or actions are opposed by a substantial
constituency, including the Company's employees who are
represented by organized labor. The description set forth below
is intended as a summary only and is qualified in its entirety by
reference to the Certificate of Incorporation and the By-laws.
Board of Directors
The Certificate of Incorporation and the By-laws provide
that, subject to any rights of holders of the Company's preferred
stock to elect additional directors under certain circumstances,
the number of directors constituting the entire Board of
Directors will be fifteen, divided into three classes consisting
of five directors each. Although directors originally served for
a three-year term, with the term of each class expiring in a
different year, as of the 1999 annual meeting of stockholders,
the term of service for each director will be one year. In
accordance with this transition, at the 1998 annual meeting of
stockholders, ten of the Company's directors (in Class I and II)
were elected for one-year terms; the remaining five directors (in
Class III) are finishing three-year terms that expire at the 1999
annual meeting. Subject to any rights of holders of any class or
series of the Company's preferred stock, a majority of the
remaining directors then in office has the sole authority to fill
any vacancies on the Board of Directors, provided, however, that
any vacancies arising with respect to a Class III director prior
to the 1999 annual meeting of stockholders will be filled by a
nominee of the remaining directors who were nominated by the same
Original Nominating Entity (as defined below) as the vacating
director in accordance with the Certificate of Incorporation. See
"Description of Capital Stock--Description of Employee Preferred
Stock" above and "Business--Employees" in the 1997 10-K. Any
director elected to fill a vacancy will hold office for the
remainder of the term until the director's successor is elected
and qualified. The Certificate of Incorporation provides that
directors may be removed only by the affirmative vote of at least
a majority of the voting power of all the then outstanding shares
of stock entitled to vote generally in the election of directors,
voting together as a single class. The affirmative vote of at
least 80% of the Voting Stock, voting together as a single class,
is required to amend or repeal, or adopt any provision
inconsistent with, the provision of the Certificate of
Incorporation relating to the number, election and terms of
directors.
"Original Nominating Entity" means, as applicable, each of
the management of the Company, ALPA, IAM and IFFA. Upon being
certified to replace IFFA as the bargaining representative for
the Company's flight attendants, the IAM became the nominating
entity with respect to the director to be elected by holders of
the IFFA Preferred Stock.
Stockholder Actions and Special Meetings
The Certificate of Incorporation provides that stockholder
action can be taken only at an annual or special meeting of
stockholders and prohibits, subject to the rights of holders of
any class or series of the Company's preferred stock to the
contrary, stockholder action by written consent in lieu of a
meeting. The Certificate of
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Incorporation and the By-laws provide that, subject the rights of
holders of any series of preferred stock, special meetings of
stockholders can be called only by (i) the Chairman of the Board
of Directors of the Company, (ii) the Corporate Secretary of the
Company within ten calendar days after receipt of the written
request of a majority of the total number of directors that the
Corporation would have if there were no vacancies and (iii) the
Board of Directors after receipt by the Company of a written
request executed by the holders of at least 35% of the
outstanding Voting Stock of the Company; provided, however, that
no separate special meeting will be required to be convened if
the Board of Directors calls an annual or special meeting to be
held no later than ninety (90) calendar days after receiving the
request for a meeting and the purposes of such annual or special
meeting of stockholders called by the Board of Directors include
the purposes specified in the request. Business permitted to be
conducted at a special meeting of stockholders is limited to the
business (x) specified in the notice of meeting given by or at
the direction of the chairman of the meeting or a majority of the
entire Board of Directors or (y) otherwise properly brought
before the meeting by the chairman of the meeting or at the
direction of a majority of the entire Board of Directors.
Moreover, the chairman of the annual or special meeting of the
stockholders will determine whether any business sought to be
brought before the meeting is properly brought.
Pursuant to the Certificate of Incorporation, the By-laws
establish an advance notice procedure with regard to the
nomination, other than by or at the direction of the Board of
Directors, of candidates for election as directors and with
regard to business to be brought before an annual meeting of
stockholders of the Company.
Amendment of the Certificate of Incorporation and By-laws
The Certificate of Incorporation contains provisions
requiring the affirmative vote of the holders of at least 80% of
the Voting Stock, voting together as a single class, to amend
certain provisions of the Certificate of Incorporation, primarily
those related to anti-takeover provisions. In addition, the
Certificate of Incorporation requires the affirmative vote of at
least three-fourths of its issued and outstanding Voting Stock,
voting as a single class and not as separate classes, to amend
the By-laws by stockholder action. "Voting Stock" means the
outstanding shares of all classes and series of capital stock of
the Company entitled to vote generally in the election of
directors of the Company and does not include any class or series
of preferred stock of the Company unless the certificate of
designations, preferences and rights for such class or series
specifically states that such class or series shall be deemed
"Voting Stock" for purposes of the Certificate of Incorporation.
Employee Preferred Stock has been deemed Voting Stock, and the 9
1/4% Preferred Stock and the 8% Preferred Stock are not Voting
Stock. See "Description of Capital Stock."
Blocking Coalition
Pursuant to the '94 Labor Agreements and in connection with
the '95 Reorganization, the Company amended the By-laws to
provide that certain actions (as set forth in the next paragraph)
may not be approved by the Board of Directors if votes are cast
against such actions by directors sufficient to constitute a
"Blocking Coalition." A Blocking Coalition is defined as the
negative votes of (i) a total of the four directors elected by
the holders of the Employee Preferred Stock plus (ii) the
negative votes of any two of the Company's other directors.
Actions subject to disapproval by the Blocking Coalition
include: (a) any sale, transfer or disposition, in a single or
series of transactions, of at least 20% of the Company's assets,
except for transactions in the ordinary course of business
including aircraft transactions as part of a fleet management
plan; (b) any merger of the Company into or with, or
consolidation of the Company with any other entity; (c) any
business combination within the meaning of Section 203 of the
DGCL; (d) any dissolution or liquidation of the Company; (e) any
filing of a petition for bankruptcy, reorganization or
receivership under any state or federal bankruptcy,
reorganization or insolvency law; (f) any repurchase, retirement
or redemption of the Company's capital stock or other equity
securities prior to their scheduled maturity or expiration,
except for redemptions out of the proceeds of any substantially
concurrent offering of comparable or junior securities and
mandatory redemptions of any redeemable preferred stock of the
Company; (g) any acquisition of assets, not related to the
Company's current business as an air carrier, in a single
transaction or a series of related transactions exceeding $50
million adjusted annually by the consumer price index; or (h) any
sale of the Company's capital stock or securities convertible
into capital stock of the Company to any person if (i) at the
time of issuance or (ii) assuming conversion of all outstanding
securities of
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the Company convertible into capital stock, such person or entity
would beneficially own at least 20% of the capital stock of the
Company.
Super Majority Voting Provisions
At all times before September 1, 2000, the Company must
obtain the approval of at least two-thirds of the issued and
outstanding Voting Stock of the Company, voting as a single class
and not as separate classes, for the holders of such Voting Stock
approve certain actions, unless such matters have been approved
by a vote of at least 80% of the Board of Directors then in
office. Actions requiring such approval are the following: (i)
any merger of the Company into or with, or consolidation of the
Company with any other entity; (ii) any business combination
within the meaning of Section 203 of the DGCL; (iii) any
dissolution or liquidation of the Company; or (iv) any
repurchase, retirement or redemption of the Company's capital
stock or other equity securities prior to their scheduled
maturity or expiration, except for redemptions out of the
proceeds of any substantially concurrent offering of comparable
or junior securities, and mandatory redemptions of any redeemable
preferred stock of the Company.
Preferred Stock
The Company believes that the ability of the Board of
Directors to issue one or more series of preferred stock of the
Company provides the Company with increased flexibility in
structuring possible future financings and in meeting other
corporate needs that might arise. The authorized shares of
preferred stock, as well as shares of Common Stock, will be
available for issuance without further action by the Company's
stockholders, unless such action is required by applicable law or
the rules of any stock exchange on which the Company securities
may be listed. If the approval of the Company's stockholders is
not required for the issuance of shares of preferred stock or
Common Stock, the Board of Directors does not intend to seek
stockholder approval. Although the Board of Directors has no
current intention of doing so, it could issue a series of
preferred stock that could, depending on the terms of such
series, impede the completion of a merger, tender offer or other
takeover attempt. The Board of Directors will make any
determination to issue such shares based on its judgment as to
the best interests of the Company and its stockholders. The Board
of Directors, in so acting, could issue preferred stock having
terms that could discourage an acquisition attempt or other
transaction that some, or a majority, of the stockholders might
believe to be in their best interests or in which stockholders
might receive a premium for their stock over the then current
market price of such stock.
Rights to Purchase Stock
The Rights are intended to protect the Company's
stockholders from certain non-negotiated takeover attempts that
present the risk of a change of control on terms which may be
less favorable to the Company's stockholders than would be
available in a transaction negotiated with and approved by the
Board of Directors of the Company. Although there can be no
certainty as to the results of any particular negotiation, the
Board of Directors believes that the interests of the
stockholders are best served if any acquisition of the Company or
a substantial percentage of the Common Stock results from
arms-length negotiations and reflects the Board's or
stockholders' careful consideration of the proposed terms of a
transaction. In particular, the Rights are intended to help (a)
reduce the risk of coercive, two-tiered, front-end loaded or
partial offers which may not offer fair value to all
stockholders, (b) mitigate against market accumulators who
through open market or private purchases may achieve a position
of substantial influence or control without paying to selling or
remaining stockholders a fair control premium and (c) deter
market accumulators who are simply interested in putting a
company "in play." See "Description of Capital Stock--Rights
Plan."
Anti-Takeover Statute
Section 203 of the DGCL is applicable to corporate
takeovers in Delaware. Subject to certain exceptions set forth
therein, Section 203 of the DGCL provides that a corporation
shall not engage in any business combination with any "interested
stockholder" for a three-year period following the date that such
stockholder becomes an interested stockholder unless (a) prior to
such date, the board of directors of the corporation approved
either the
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business combination or the transaction that resulted in the
stockholder becoming an interested stockholder, (b) upon
consummation of the transaction that resulted in the stockholder
becoming an interested stockholder, the interested stockholder
owned at least 85% of the voting stock of the corporation
outstanding at the time the transaction commenced (excluding
certain shares) or (c) on or subsequent to such date, the
business combination is approved by the board of directors of the
corporation and by the affirmative vote of at least 66 2/3% of
the outstanding voting stock that is not owned by the interested
stockholder. Except as specified therein, an interested
stockholder is defined to include any person that is the owner of
15% or more of the outstanding voting stock of the corporation,
or is an affiliate or associate of the corporation and was the
owner of 15% or more of the outstanding voting stock of the
corporation, at any time within three years immediately prior to
the relevant date, and the affiliates and associates of such
person. Under certain circumstances, Section 203 of the DGCL
makes it more difficult for an "interested stockholder" to effect
various business combinations with a corporation for a three-year
period, although the stockholders may, by adopting an amendment
to the corporation's certificate of incorporation or by-laws,
elect not to be governed by this section effective twelve months
after adoption. The Certificate of Incorporation and the By-laws
do not exclude the Company from the restrictions imposed under
Section 203 of the DGCL, but do provide that a business
combination within the meaning of Section 203 of the DGCL (i) may
be approved without the approval of at least 66 2/3% of the
Voting Stock if the business combination is approved by at least
80% of the directors then in office and (ii) may not be approved
if votes are cast against the action by the Blocking Coalition.
It is anticipated that the provisions of Section 203 of the DGCL
and the provisions of the Certificate of Incorporation may
encourage companies interested in acquiring the Company to
negotiate in advance with the Board of Directors of the Company
since the stockholder approval requirement would be avoided if
80% of the directors then in office approve either the business
combination or the transaction that resulted in the stockholder
becoming an interested stockholder.
33
<PAGE>
CERTAIN FEDERAL INCOME TAX CONSIDERATIONS
PROSPECTIVE PURCHASERS ARE STRONGLY URGED TO CONSULT THEIR
OWN TAX ADVISORS REGARDING THE TAX CONSEQUENCES OF ACQUIRING,
HOLDING OR DISPOSING OF THE COMMON STOCK IN LIGHT OF THEIR
PARTICULAR CIRCUMSTANCES, AND THE CONSEQUENCES UNDER FEDERAL,
STATE, LOCAL AND FOREIGN TAX LAWS.
34
<PAGE>
PLAN OF DISTRIBUTION
The Company will not receive any of the proceeds from the
sale of the Common Stock pursuant to this Prospectus, all of
which will be sold by Selling Holders. Such securities as offered
hereby may be sold from time to time to purchasers directly by
the Selling Holders; alternatively, the Selling Holders may from
time to time offer such securities to and through underwriters,
broker/dealers or agents, who may receive compensation in the
form of underwriting discounts, concessions or commissions from
the Selling Holders or the purchasers of such securities for whom
they may act as agents. The Selling Holders and any underwriters,
broker/dealers and agents that participate in the distribution of
such securities may be deemed to be "underwriters" within the
meaning of the Securities Act and any profit on the sale of such
securities by them and any discount commissions or other
compensation received by any such underwriter, broker/dealer or
agent may be deemed to be underwriting discounts and commissions
under the Securities Act.
The Common Stock offered hereby may be sold from time to
time in one or more transactions at fixed prices, at prevailing
market prices at the time of sale, at varying prices determined
at the time of sale or at negotiated prices. The sale of such
securities may be effected in transactions (which may involve
crosses or block transactions) (i) on any national securities
exchange or quotation service on which such securities may be
listed or quoted at the time of sale, (ii) in the over-the-
counter market, (iii) in transactions otherwise than on such
exchanges or in the over-the-counter market or (iv) through the
writing of options. At the time a particular offering of such
securities is made, a Prospectus Supplement, if required, will be
distributed which will set forth the aggregate amount of Common
Stock being offered and the terms of the offering, including the
name or names of any underwriters, broker/dealers or agents, any
discounts, commissions and other terms constituting compensation
from the Selling Holders and any discounts, commissions or
concessions allowed or reallowed or paid to broker/dealers.
To comply with the securities laws of certain
jurisdictions, if applicable, the Common Stock will be offered or
sold in such jurisdictions only through registered or licensed
brokers or dealers. In addition, in certain jurisdictions, such
securities may not be offered or sold unless they have been
registered or qualified for sale in such jurisdictions or any
exemption from registration or qualification is available and is
complied with.
Pursuant to the Registration Rights Agreement, all expenses
of the registration of the Common Stock will be paid by the
Company, including, without limitation, SEC filing fees and
expenses of compliance with state securities or "blue sky" laws;
provided, however, that the Selling Holders will pay all
underwriting discounts and selling commissions, if any. The
Company will indemnify the Selling Holders against certain civil
liabilities, including certain liabilities under the Securities
Act, or will be entitled to contribution in connection therewith.
LEGAL MATTERS
The validity of the Common Stock offered hereby will be
passed upon for the Company by Cleary, Gottlieb, Steen &
Hamilton, New York, New York.
EXPERTS
The consolidated financial statements of the Company as of
December 31, 1997 and 1996 and for each of the periods in the
three-year period ended December 31, 1997 incorporated by
reference into this Prospectus have been audited by KPMG Peat
Marwick LLP, independent auditors, as set forth in their report
incorporated by reference herein and are incorporated by
reference herein in reliance upon the report of such firm given
and upon their authority as experts in accounting and auditing.
Their report refers to the application of fresh start reporting
in connection with the '95 Reorganization.
36
<PAGE>
================================================================
No dealer, salesperson or other person has been
authorized to give any information or to make any
representations other than those contained or
incorporated by reference in this Prospectus, and, if
given or made, such information or representations must
not be relied upon. This Prospectus does not constitute
an offer to sell or a solicitation by anyone in any
jurisdiction in which such offer or solicitation is not
authorized, or in which the person making such offer or
solicitation is not qualified to do so, or to any
person to whom it is unlawful to make such offer or
solicitation. Neither the delivery of this Prospectus
nor the sale made hereunder shall, under any
circumstances, create an implication that the
information contained herein is correct as of any time
subsequent to the date hereof or that there has been no
change in the affairs of the Company since the date
hereof.
----------------
TABLE OF CONTENTS
Page
Available Information...........................3
Incorporation of Certain Documents by Reference.3
Forward-Looking Statements......................4
Risk Factors....................................5
The Company....................................17
Use of Proceeds................................17
Capitalization.................................18
Selling Holders................................20
Description of Capital Stock...................22
Certain Provisions of the Certificate of
Incorporation, the By-laws and Delaware Law..30
Certain Federal Income Tax Considerations......34
Plan of Distribution...........................35
Legal Matters..................................35
Experts........................................35
================================================================
================================================================
1,287,335 Shares
TRANS WORLD
AIRLINES, INC.
Common Stock
PROSPECTUS
July __, 1998
================================================================
<PAGE>
PART II. INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 14. Other Expenses of Issuance and Distribution
SEC registration fee...... $ 3,869
Accounting fees........... 15,000*
Legal fees................ 50,000*
Miscellaneous............. 50,000*
--------
TOTAL.................... $118,869*
========
- ------------
* Estimated
ITEM 15. Indemnification of Directors and Officers
Under the Delaware General Corporation Law (the "DGCL"),
directors, officers, employees and other individuals may be
indemnified against expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement in connection
with specified actions, suits or proceedings, whether civil,
criminal, administrative or investigative (other than a
derivative action) if they acted in good faith and in a manner
they reasonably believed to be in or not opposed to the best
interests of TWA and, with respect to any criminal action or
proceeding, had no reasonable cause to believe their conduct was
unlawful. A similar standard of care is applicable in the case of
a derivative action, except that indemnification only extends to
expenses (including attorneys' fees) incurred in connection with
the defense or settlement of such an action, and the DGCL
requires court approval before there can be any indemnification
of expenses where the person seeking indemnification has been
found liable to TWA.
The eleventh article of TWA's Third Amended and Restated
Certificate of Incorporation ("Article Eleventh") provides that
the Company shall indemnify any person who was or is a party or
is threatened to be made a party to, or testifies in, any
threatened, pending or completed action, suit or proceeding,
whether civil, criminal, administrative or investigative in
nature, by reason of the fact that such person is or was a
director, officer, employee or agent of the Company, or is or was
serving at the request of the Company as a director, officer,
employee or agent of another corporation, partnership, joint
venture, employee benefit plan, trust or other enterprise,
against expenses (including attorneys' fees), judgments, fines
and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding
to the full extent permitted by law, and the Company may adopt
By-laws or enter into agreements with any such person for the
purpose of providing for such indemnification.
To the extent that a director or officer of the Company has
been successful on the merits or otherwise (including without
limitation settlement by nolo contendere) in defense of any
action, suit or proceeding referred to in the immediately
preceding paragraph, or in defense of any claim, issue or matter
therein, such person shall be indemnified against expenses
(including attorneys' fees) actually and reasonably incurred by
such person in connection therewith.
Expenses incurred by an officer, director, employee or
agent in defending or testifying in a civil, criminal,
administrative or investigative action, suit or proceeding may be
paid by the Company in advance of the final disposition of such
action, suit or proceeding upon receipt of an undertaking by or
on behalf of such director or officer to repay such amount if it
shall ultimately be determined that such director or officer is
not entitled to be indemnified by the Company against such
expenses as authorized by Article Eleventh and the Company may
adopt By-laws or enter into agreements with such persons for the
purpose of providing for such advances.
The indemnification permitted by Article Eleventh shall not
be deemed exclusive of any other rights to which any person may
be entitled under any agreement, vote of stockholders or
disinterested directors or otherwise, both as to action in such
person's official capacity and as to action in another capacity
while holding an office, and shall continue as to a person who
has ceased to be a director, officer, employee or agent and shall
inure to the benefit of the heirs, executors and administrators
of such person.
II-1
<PAGE>
The Company shall have power to purchase and maintain
insurance on behalf of any person who is or was a director,
officer, employee or agent of the Company, or is or was serving
at the request of the Company as a director, officer, employee or
agent of another corporation, partnership, joint venture,
employee benefit plan trust or other enterprise, against any
liability asserted against such person and incurred by such
person in any such capacity, or arising out of such person's
status as such, whether or not the Company would have the power
to indemnify such person against such liability under the
provisions of Article Eleventh or otherwise.
If the DGCL is amended to further expand the
indemnification permitted to directors, officers, employees or
agents of the Company, then the Company shall indemnify such
persons to the fullest extent permitted by the DGCL, as so
amended.
The obligations of the Company to indemnify any person
serving as one of its directors, officers or employees as of or
following the Company's '93 Reorganization, by reason of such
person's past or future service in such a capacity, or as a
director, officer or employee of another corporation, partnership
or other legal entity, to the extent provided in Article Eleventh
or in similar constituent documents or by statutory law or
written agreement of or with the Company, shall be deemed and
treated as executory contracts assumed by the Company pursuant to
the Company's '93 Reorganization. Accordingly, such
indemnification obligations survive and were unaffected by the
entry of the order confirming the Company's '93 Reorganization.
The obligations of the Company to indemnify any person who, as of
the '93 Reorganization, was no longer serving as one of its
directors, officers or employees, which indemnity obligation
arose by reason of such person's prior service in any such
capacity, or as a director, officer or employee of another
corporation, partnership or other legal entity, to the extent
provided in the certificate of incorporation, by-laws or other
constituent documents or by statutory law or written agreement of
or with TWA were terminated and discharged pursuant to Section
502(e) of the United States Bankruptcy Code or otherwise, as of
the date the '93 Reorganization was confirmed. Nothing contained
in the Third Amended and Restated Certificate of Incorporation of
the Company shall be deemed to reinstate any obligation of the
Corporation to indemnify any person or entity, which was
otherwise released under or in connection with the Comprehensive
Settlement Agreement entered into pursuant to the '93
Reorganization.
Insofar as indemnification for liabilities arising under
the Securities Act of 1933 may be permitted to directors,
officers and controlling persons of the registrant pursuant to
the foregoing provisions, or otherwise, the registrant has been
advised that in the opinion of the Securities and Exchange
Commission, such indemnification is against public policy as
expressed in the Securities Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses
incurred or paid by a director, officer or controlling person of
the registrant in the successful defense of any action, suit or
proceeding) is asserted by such director, officer or controlling
person in connection with the securities being registered, the
registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question of whether such
indemnification by it is against public policy as expressed in
the Securities Act and will be governed by the final adjudication
of such issue.
ITEM 16. Exhibits
(a) Exhibits
*4.1 --Third Amended and Restated Certificate of Incorporation
of the Registrant (Exhibit 3(i) to the Registrant's
Registration Statement on Form S-4, Registration Number
333-26645)
*4.2 --Amended and Restated By-Laws of Trans World Airlines,
Inc., effective May 24, 1996 (Exhibit 3(ii) to 6/96
10-Q)
II-2
<PAGE>
5 --Opinion of Cleary, Gottlieb, Steen & Hamilton, Counsel
to the Registrant, regarding the validity of the
securities being registered
23.1 --Consent of KPMG Peat Marwick LLP
23.2 --Consent of Cleary, Gottlieb, Steen & Hamilton, Counsel
to the Registrant (included in Exhibit 5)
24 --Powers of Attorney
*27 --Financial Data Schedule (included in 12/31/97 Form 10-K)
---------------
* Incorporated by reference
(b) Schedules
All supplementary schedules relating to the Registration
Statement are omitted because they are not required or because
the required information, where material, is contained in the
Consolidated Financial Statements incorporated by reference from
the 12/31/97 Form 10-K and 3/31/98 Form 10-Q.
ITEM 17. Undertakings
(a) The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or sales are
being made, a post-effective amendment to this registration
statement:
(i) To include any prospectus required by section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or events
arising after the effective date of the registration
statement (or the most recent post-effective amendment
thereof) which, individually or in the aggregate, represent
a fundamental change in the information set forth in the
registration statement. Notwithstanding the foregoing, any
increase or decrease in volume of securities offered (if
the total dollar value of securities offered would not
exceed that which was registered) and any deviation from
the low or high end of the estimated maximum offering range
may be reflected in the form of prospectus filed with the
Commission pursuant to Rule 424(b) if, in the aggregate,
the changes in volume and price represent no more than a
20% change in the maximum aggregate offering price set
forth in the "Calculation of Registration Fee" table in the
effective registration statement;
(iii) To include any material information with respect
to the plan of distribution not previously disclosed in the
registration statement or any material change to such
information in the registration statement.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering
of such securities at that time shall be deemed to be the
initial bona fide offering thereof.
II-3
<PAGE>
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered
which remain unsold at the termination of the offering.
(b) The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of
1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to section 15(d) of the Securities
Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration
statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be
the initial bona fide offering thereof.
(c) The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the
Securities Act of 1933, the information omitted from the form
of prospectus filed as part of this registration statement in
reliance upon Rule 430A and contained in a form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act shall be deemed to be part of
this registration statement as of the time it was declared
effective.
(2) For the purpose of determining any liability under the
Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time
shall be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to
believe that it meets the requirements for filing on Form S-3 and
has duly caused this Registration Statement on Form S-3 to be
signed on its behalf by the undersigned, thereunto duly
authorized in the City of St. Louis, State of Missouri, July 2,
1998.
TRANS WORLD AIRLINES, INC.
July 2, 1998
By /s/ Michael J. Palumbo
-----------------------------
Michael J. Palumbo,
Senior Vice President
and Chief Financial Officer
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement on Form S-3 has been signed by the
following persons in the capacities and on the dates indicated.
Signatures Title Date
---------- ----- ----
/s/ Gerald L. Gitner Director, Chairman of July 2, 1998
-------------------- the Board and Chief
Gerald L. Gitner Executive Officer
(Principal Executive
Officer)
/s/ Michael J. Palumbo Senior Vice President July 2, 1998
-------------------- and Chief Financial
Michael J. Palumbo Officer (Principal
Financial Officer
and Principal
Accounting Officer)
* Director July 2, 1998
--------------------
John W. Bachmann
* Director July 2, 1998
--------------------
William F. Compton
* Director July 2, 1998
--------------------
Eugene P. Conese
Director
--------------------
Sherry L. Cooper
* Director July 2, 1998
--------------------
Edgar M. House
* Director July 2, 1998
--------------------
Thomas H. Jacobsen
* Director July 2, 1998
--------------------
Myron Kaplan
* Director July 2, 1998
--------------------
David M. Kennedy
* Director July 2, 1998
--------------------
General Merrill A.
McPeak
* Director July 2, 1998
--------------------
Thomas F. Meagher
II-5
<PAGE>
* Director July 2, 1998
--------------------
Brent S. Miller
* Director July 2, 1998
--------------------
William O'Driscoll
* Director July 2, 1998
--------------------
G. Joseph Reddington
* Director July 2, 1998
--------------------
Blanche M. Touhill
*By: /s/ Kathleen A. Soled July 2, 1998
------------------
Kathleen A. Soled
as Attorney-in-fact
II-6
<PAGE>
EXHIBIT INDEX
*4.1 --Third Amended and Restated Certificate of Incorporation
of the Registrant (Exhibit 3(i) to the Registrant's
Registration Statement on Form S-4, Registration Number
333-26645)
*4.2 --Amended and Restated By-Laws of Trans World Airlines,
Inc., effective May 24, 1996 (Exhibit 3(ii) to 6/96
10-Q)
5 --Opinion of Cleary, Gottlieb, Steen & Hamilton, Counsel
to the Registrant, regarding the validity of the
securities being registered
23.1 --Consent of KPMG Peat Marwick LLP
23.2 --Consent of Cleary, Gottlieb, Steen & Hamilton, Counsel
to the Registrant (included in Exhibit 5)
24 --Powers of Attorney
*27 --Financial Data Schedule (included in 12/31/97 Form 10-K)
---------------
* Incorporated by reference
[CGS&H Letterhead]
Writer's Direct Dial: (212) 225-2552
July 2, 1998
Trans World Airlines, Inc.
One City Centre
515 N. Sixth Street
St. Louis, Missouri 63101
Ladies and Gentlemen:
We have acted as counsel for Trans World Airlines,
Inc., a Delaware corporation (the "Company"), in connection with
the registration under the Securities Act of 1933, as amended
(the "Securities Act"), of 1,287,335 additional shares of the
Company's common stock, par value $0.01 (the "Additional
Shares"), to be issued upon conversion of its 10 1/4% Mandatory
Conversion Equity Notes due 1999 (the "Equity Notes") that were
issued pursuant to an Indenture dated as of June 16, 1998, by and
between the Company and First Security Bank, National
Association, as trustee (the "Indenture"). The Additional Shares
are being registered under a registration statement of the
Company on Form S-3 (the "Registration Statement") filed today
with the Securities and Exchange Commission (the "Commission")
under the Securities Act.
We have reviewed the originals or copies certified or
otherwise identified to our satisfaction of all such corporate
records of the Company and such other instruments and other
certificates of public officials, officers and representatives of
the Company and such other persons, and we have made such
investigations of law, as we have deemed appropriate as a basis
for the opinion expressed below.
<PAGE>
Trans World Airlines, Inc., p. 2
In rendering the opinion expressed below, we have
assumed the authenticity of all documents submitted to us as
originals and the conformity to the originals of all documents
submitted to us as copies. In addition, we have assumed and have
not verified the accuracy as to factual matters of each document
we have reviewed.
Based on the foregoing, and subject to the further
assumptions and qualifications set forth below, it is our opinion
that the Additional Shares into which the Equity Notes are
convertible at the initial conversion price have been duly
authorized by all necessary corporate action of the Company and
reserved for issuance upon conversion and, upon issuance thereof
on conversion of the Equity Notes in accordance with the terms of
the Indenture and the terms of the Equity Notes at conversion
prices at or in excess of the par value of such shares of Common
Stock, will (assuming the shares of Common Stock so issuable are
still validly authorized as of the conversion date) be validly
issued, fully paid and non-assessable.
We have assumed for purposes of the opinion set forth
above that the initial conversion price at which the Equity Notes
will be converted into Common Stock will not be less than the
closing price of the Common Stock on the American Stock Exchange
on the trading day immediately preceding the date hereof.
We express no opinion other than as to the federal law
of the United States of America and the laws of the State of New
York.
We hereby consent to the filing of this opinion as an
exhibit to the Registration Statement and to the reference to our
name under the heading "Legal Matters" in the Prospectus included
in the Registration Statement. By giving such consent, we do not
thereby admit that we are experts with respect to any part of the
Registration Statement, including this exhibit, within the
meaning of the term "expert" as used in the Securities Act or the
rules and regulations of the Commission issued thereunder.
Very truly yours,
CLEARY, GOTTLIEB, STEEN & HAMILTON
By /s/ David W. Hirsch
---------------------------------
David W. Hirsch, a Partner
Exhibit 23.1
AUDITORS' CONSENT
The Board of Directors
Trans World Airlines, Inc.:
We consent to the use of our report incorporated herein by
reference and to the reference to our firm under the heading
"Experts" in the prospectus. In addition, our report dated
March 4, 1998 refers to the application of fresh start
reporting as of September 1, 1995.
/s/ KPMG Peat Marwick LLP
Kansas City, Missouri
July 2, 1998
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, John W. Bachmann, a
Director of TRANS WORLD AIRLINES, INC. (the "Company"), a
Delaware corporation, do constitute and appoint Gerald L. Gitner,
Michael J. Palumbo and Kathleen A. Soled, jointly and severally,
my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution for me in my name, place and
stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the Company's shelf registration statement of
its 10 1/4% Mandatory Conversion Equity Notes due 1999, and to
file the same with the Securities and Exchange Commission,
together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead,
in any and all capacities, any amendments (including post-
effective amendments) and supplements to said Registration
Statement, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the
proposed offering by the Company of the securities registered
pursuant to said Registration Statement, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 25th
day of June, 1998.
/s/ John W. Bachmann
------------------------
John W. Bachmann
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, William F. Compton,
a Director of TRANS WORLD AIRLINES, INC. (the "Company"), a
Delaware corporation, do constitute and appoint Gerald L. Gitner,
Michael J. Palumbo and Kathleen A. Soled, jointly and severally,
my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution for me in my name, place and
stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the Company's shelf registration statement of
its 10 1/4% Mandatory Conversion Equity Notes due 1999, and to
file the same with the Securities and Exchange Commission,
together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead,
in any and all capacities, any amendments (including post-
effective amendments) and supplements to said Registration
Statement, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the
proposed offering by the Company of the securities registered
pursuant to said Registration Statement, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 24th
day of June, 1998.
/s/ William F. Compton
------------------------
William F. Compton
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Eugene P. Conese,
a Director of TRANS WORLD AIRLINES, INC. (the "Company"), a
Delaware corporation, do constitute and appoint Gerald L. Gitner,
Michael J. Palumbo and Kathleen A. Soled, jointly and severally,
my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution for me in my name, place and
stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the Company's shelf registration statement of
its 10 1/4% Mandatory Conversion Equity Notes due 1999, and to
file the same with the Securities and Exchange Commission,
together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead,
in any and all capacities, any amendments (including post-
effective amendments) and supplements to said Registration
Statement, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the
proposed offering by the Company of the securities registered
pursuant to said Registration Statement, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue
hereof.
/s/ Eugene P. Conese
------------------------
Eugene P. Conese
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Edgar M. House, a
Director of TRANS WORLD AIRLINES, INC. (the "Company"), a
Delaware corporation, do constitute and appoint Gerald L. Gitner,
Michael J. Palumbo and Kathleen A. Soled, jointly and severally,
my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution for me in my name, place and
stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the Company's shelf registration statement of
its 10 1/4% Mandatory Conversion Equity Notes due 1999, and to
file the same with the Securities and Exchange Commission,
together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead,
in any and all capacities, any amendments (including post-
effective amendments) and supplements to said Registration
Statement, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the
proposed offering by the Company of the securities registered
pursuant to said Registration Statement, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 26th
day of June, 1998.
/s/ Edgar M. House
------------------------
Edgar M. House
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Thomas H. Jacobsen,
a Director of TRANS WORLD AIRLINES, INC. (the "Company"), a
Delaware corporation, do constitute and appoint Gerald L. Gitner,
Michael J. Palumbo and Kathleen A. Soled, jointly and severally,
my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution for me in my name, place and
stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the Company's shelf registration statement of
its 10 1/4% Mandatory Conversion Equity Notes due 1999, and to
file the same with the Securities and Exchange Commission,
together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead,
in any and all capacities, any amendments (including post-
effective amendments) and supplements to said Registration
Statement, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the
proposed offering by the Company of the securities registered
pursuant to said Registration Statement, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 26th
day of June, 1998.
/s/ Thomas H. Jacobsen
------------------------
Thomas H. Jacobsen
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Myron Kaplan, a
Director of TRANS WORLD AIRLINES, INC. (the "Company"), a
Delaware corporation, do constitute and appoint Gerald L. Gitner,
Michael J. Palumbo and Kathleen A. Soled, jointly and severally,
my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution for me in my name, place and
stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the Company's shelf registration statement of
its 10 1/4% Mandatory Conversion Equity Notes due 1999, and to
file the same with the Securities and Exchange Commission,
together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead,
in any and all capacities, any amendments (including post-
effective amendments) and supplements to said Registration
Statement, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the
proposed offering by the Company of the securities registered
pursuant to said Registration Statement, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 25th
day of June, 1998.
/s/ Myron Kaplan
------------------------
Myron Kaplan
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, David M. Kennedy, a
Director of TRANS WORLD AIRLINES, INC. (the "Company"), a
Delaware corporation, do constitute and appoint Gerald L. Gitner,
Michael J. Palumbo and Kathleen A. Soled, jointly and severally,
my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution for me in my name, place and
stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the Company's shelf registration statement of
its 10 1/4% Mandatory Conversion Equity Notes due 1999, and to
file the same with the Securities and Exchange Commission,
together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead,
in any and all capacities, any amendments (including post-
effective amendments) and supplements to said Registration
Statement, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the
proposed offering by the Company of the securities registered
pursuant to said Registration Statement, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 25th
day of June, 1998.
/s/ David M. Kennedy
------------------------
David M. Kennedy
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, General Merrill A.
McPeak, a Director of TRANS WORLD AIRLINES, INC. (the "Company"),
a Delaware corporation, do constitute and appoint Gerald L.
Gitner, Michael J. Palumbo and Kathleen A. Soled, jointly and
severally, my true and lawful attorneys-in-fact, with full power
of substitution and resubstitution for me in my name, place and
stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the Company's shelf registration statement of its
10 1/4% Mandatory Conversion Equity Notes due 1999, and to file
the same with the Securities and Exchange Commission, together
with all exhibits thereto and other documents in connection
therewith, and to sign on my behalf and in my stead, in any and
all capacities, any amendments (including post- effective
amendments) and supplements to said Registration Statement,
incorporating such changes as any of the said attorneys-in-fact
deems appropriate, in the matter of the proposed offering by the
Company of the securities registered pursuant to said
Registration Statement, hereby ratifying and confirming all that
each of said attorneys-in-fact, or his substitute or substitutes,
may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 25th
day of June, 1998.
/s/ General Merrill A. McPeak
-----------------------------
General Merrill A. McPeak
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Thomas F. Moagher, a
Director of TRANS WORLD AIRLINES, INC. (the "Company"), a
Delaware corporation, do constitute and appoint Gerald L. Gitner,
Michael J. Palumbo and Kathleen A. Soled, jointly and severally,
my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution for me in my name, place and
stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the Company's shelf registration statement of
its 10 1/4% Mandatory Conversion Equity Notes due 1999, and to
file the same with the Securities and Exchange Commission,
together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead,
in any and all capacities, any amendments (including post-
effective amendments) and supplements to said Registration
Statement, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the
proposed offering by the Company of the securities registered
pursuant to said Registration Statement, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 30th
day of June, 1998.
/s/ Thomas F. Moagher
------------------------
Thomas F. Moagher
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Brent S. Miller, a
Director of TRANS WORLD AIRLINES, INC. (the "Company"), a
Delaware corporation, do constitute and appoint Gerald L. Gitner,
Michael J. Palumbo and Kathleen A. Soled, jointly and severally,
my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution for me in my name, place and
stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the Company's shelf registration statement of
its 10 1/4% Mandatory Conversion Equity Notes due 1999, and to
file the same with the Securities and Exchange Commission,
together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead,
in any and all capacities, any amendments (including post-
effective amendments) and supplements to said Registration
Statement, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the
proposed offering by the Company of the securities registered
pursuant to said Registration Statement, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 26th
day of June, 1998.
/s/ Brent S. Miller
------------------------
Brent S. Miller
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, William O'Driscoll,
a Director of TRANS WORLD AIRLINES, INC. (the "Company"), a
Delaware corporation, do constitute and appoint Gerald L. Gitner,
Michael J. Palumbo and Kathleen A. Soled, jointly and severally,
my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution for me in my name, place and
stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the Company's shelf registration statement of
its 10 1/4% Mandatory Conversion Equity Notes due 1999, and to
file the same with the Securities and Exchange Commission,
together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead,
in any and all capacities, any amendments (including post-
effective amendments) and supplements to said Registration
Statement, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the
proposed offering by the Company of the securities registered
pursuant to said Registration Statement, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this ____
day of June, 1998.
/s/ William O'Driscoll
------------------------
William O'Driscoll
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, G. Joseph Reddington,
a Director of TRANS WORLD AIRLINES, INC. (the "Company"), a
Delaware corporation, do constitute and appoint Gerald L. Gitner,
Michael J. Palumbo and Kathleen A. Soled, jointly and severally,
my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution for me in my name, place and
stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the Company's shelf registration statement of
its 10 1/4% Mandatory Conversion Equity Notes due 1999, and to
file the same with the Securities and Exchange Commission,
together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead,
in any and all capacities, any amendments (including post-
effective amendments) and supplements to said Registration
Statement, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the
proposed offering by the Company of the securities registered
pursuant to said Registration Statement, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 25th
day of June, 1998.
/s/ G. Joseph Reddington
------------------------
G. Joseph Reddington
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Blanche M. Touhill,
a Director of TRANS WORLD AIRLINES, INC. (the "Company"), a
Delaware corporation, do constitute and appoint Gerald L. Gitner,
Michael J. Palumbo and Kathleen A. Soled, jointly and severally,
my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution for me in my name, place and
stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Act of 1933, the Registration
Statement on Form S-3 for TRANS WORLD AIRLINES, INC. in
connection with the Company's shelf registration statement of
its 10 1/4% Mandatory Conversion Equity Notes due 1999, and to
file the same with the Securities and Exchange Commission,
together with all exhibits thereto and other documents in
connection therewith, and to sign on my behalf and in my stead,
in any and all capacities, any amendments (including post-
effective amendments) and supplements to said Registration
Statement, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, in the matter of the
proposed offering by the Company of the securities registered
pursuant to said Registration Statement, hereby ratifying and
confirming all that each of said attorneys-in-fact, or his
substitute or substitutes, may do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 29th
day of June, 1998.
/s/ Blanche M. Touhill
------------------------
Blanche M. Touhill
