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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
----------------
FORM 10-K/A No. 1
/x/ ANNUAL REPORT PURSUANT TO SECTION 13 OR
15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 1999
OR
/ / TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Commission File Number 1-7815
TRANS WORLD AIRLINES, INC.
(Exact name of registrant as specified in its charter.)
DELAWARE 43-1145889
(State or other jurisdiction of (I.R.S. Employer Identification Number.)
incorporation or organization.)
ONE CITY CENTRE
515 NORTH 6TH STREET
ST. LOUIS, MISSOURI 63101
(Address of principal executive offices, including zip code.)
(314) 589-3000
(Registrant's telephone number, including area code.)
Securities registered pursuant to Section 12(b) of the Act:
<TABLE>
<CAPTION>
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED
- ------------------------------------------- -----------------------------------------
<S> <C>
Common Stock, par value $.01 per share American Stock Exchange
Warrants (expiring August 23, 2002) American Stock Exchange
11 1/2% Senior Secured Notes due 2004 American Stock Exchange
11 3/8% Senior Notes due 2006 American Stock Exchange
11 3/8% Senior Secured Notes due 2003 American Stock Exchange
Series A Participating Cumulative Preferred
Stock Purchase Rights American Stock Exchange
</TABLE>
-------------
Securities registered pursuant to Section 12(g) of the Act:
(Title of Class)
8% Cumulative Convertible Exchangeable Preferred Stock,
par value $.01 per share
9 1/4% Cumulative Convertible Exchangeable Preferred Stock,
par value $.01 per share
8% Secured Notes due 2001
Warrants (expiring April 1, 2002)
Indicate by check mark whether the registrant (1) has filed all
reports required to be filed by Section 13 or 15(d) of the Securities
Exchange Act of 1934 during the preceding 12 months; and (2) has been
subject to such filing requirements for the past 90 days.
Yes /x/ No / /
Indicate by check mark if disclosure of delinquent filers pursuant
to Item 405 of Regulation S-K is not contained herein, and will not be
contained, to the best of registrant's knowledge, in definitive proxy or
information statements incorporated by reference in Part III of this
Form 10-K or any amendment to this Form 10-K. / /
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDING DURING THE PRECEDING FIVE YEARS:
Indicate by check mark whether the registrant has filed all documents
and reports required to be filed by Section 12, 13 or 15(d) of the
Securities Exchange Act of 1934 subsequent to the distribution of
securities under a plan confirmed by a court. Yes /x/ No / /
The aggregate market value of voting stock held by non-affiliates
of the registrant as of February 16, 2000, $155,429,631.
As of February 16, 2000, 59,981,122 shares of the registrant's
common stock, par value $0.01 per share, were outstanding.
DOCUMENTS INCORPORATED BY REFERENCE:
Definitive Proxy Statement for the Annual Meeting of
Stockholders on May 23, 2000 - Part III
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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
Certain statements made below relating to plans, conditions,
objectives, and economic performance go beyond historical information
and may provide an indication of future financial condition or results
of operations. To that extent, they are forward-looking statements
within the meaning of Section 21E of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), and each is subject to risks,
uncertainties and assumptions that could cause actual results to differ
from those in the forward-looking statements. Should one or more of
these risks or uncertainties materialize, or should underlying
assumptions prove incorrect, actual results may vary materially from
those anticipated, estimated or projected. In any event, these forward-
looking statements speak only as of their dates, and the Company
undertakes no obligation to update or revise any of them whether as a
result of new information, future events or otherwise.
GENERAL
TWA operates in an intensely competitive environment. The Company
competes with one or more major airlines on most of its routes
(including all routes between major cities). 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, thereby strengthening their
overall operations, by transporting passengers connecting with or
otherwise traveling on the alliance carriers. Such alliances could
further intensify the competitive environment.
The rapid growth of regional jet airline affiliates represents a
significant competitive challenge for TWA due to its reliance on
through-hub passenger traffic. A small regional jet can now offer
direct service in markets that previously were served only by through-
hub service. The Company's labor agreements with its employee groups
will allow TWA to utilize regional jet feed to a limited extent.
These issues represent a competitive challenge for the Company,
which has higher operating costs than many regional carriers and fewer
financial resources than many of its major competitors. Small
fluctuations in RASM and CASM can significantly affect TWA's financial
results. The Company has experienced significant operating losses on an
annual basis since the early 1990s, except in 1995 when the Company's
combined operating profit was $25.1 million. TWA expects the airline
industry will remain extremely competitive for the foreseeable future.
The Company continues to focus on implementing several strategic
initiatives to improve operational reliability and schedule integrity
and overall product quality in order to attract higher-yield passengers
and enhance overall productivity. Key initiatives currently in progress
include:
* modernizing its fleet;
* reducing costs and improving productivity;
* implementing revenue-enhancing marketing initiatives and
schedule realignments to attract higher-yield travelers;
* implementing employee-related initiatives to reinforce TWA's
focus on operational performance;
* optimizing TWA's route structure through the opening of
"focus cities" and the use of regional jet feed into TWA's
system; and
* better coordinating of commuter feed, turbo prop products
and schedules.
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TWA faces a number of uncertainties that may adversely affect its
future results of operations, including:
* insufficient levels of air passenger traffic resulting from,
among other things, war, threat of war, terrorism or changes
in the economy;
* governmental limitations on the ability of TWA to service
certain airports and/or foreign markets;
* regulatory requirements necessitating additional capital or
operating expenditures;
* pricing and scheduling initiatives by competitors;
* the availability and cost of capital;
* increases in fuel and other operating costs;
* the outcome of certain ongoing labor negotiations; and
* the adverse effects on yield of the continued implementation
of a discount ticket program (the "Ticket Agreement")
between TWA and Karabu Corporation, a company controlled by
Carl Icahn ("Karabu"). (See "Legal Proceedings.")
TWA is unable to predict the potential effect of any of these
uncertainties upon its future results of operations.
Labor Costs
Wage rates for most of TWA's employees have increased recently as
a result of several events. A new collective bargaining agreement
between TWA and its pilots became effective September 1, 1998. As part
of the new contract, TWA agreed to pay increases over four years that
will result in wages for TWA's pilots improving in 2002 to 90% of the
industry average as determined by wage rates in contracts in effect as
of August 1998. The contract also provides for significant work rule
improvements for pilots in certain areas while also granting TWA
flexibility and improvements necessary to enhance its competitive
position. Under the contract, TWA agreed to distribute either one
million shares of TWA's common stock or $11 million in cash to its
pilots, in four equal quarterly payments commencing in 1999. TWA had
the option to make each quarterly payment in shares or in cash. The
Company made the quarterly distribution of 250,000 shares each of common
stock in April, August, and November 1999 and the fourth quarterly
distribution of 250,000 shares of common stock was made on February 15,
2000.
On June 13, 1999, TWA and the IAM reached tentative agreement on
new contract proposals for TWA flight attendant and ground employees,
who constituted approximately 73% of TWA's employees as of June 30,
1999. The contracts became effective August 1, 1999 and become amendable
on January 31, 2001.
TWA agreed to salary increases over the term of the agreement that
will result in wage improvements of 11.5% to 18.25% for TWA's ground
employees and flight attendants such that by the amendable date of the
contract their wages will average from 86.5% to 91.0% of industry
average as determined by wage rates in contracts in effect as of June
1999. Additionally, TWA has agreed to distribute 3,500,000 shares of
TWA common stock to these employees. On October 7, 1999, 500,000 shares
were distributed to IAM-represented flight attendants in a manner
determined by the IAM. The remaining 3,000,000 shares will be
distributed in a
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manner determined by the IAM to IAM-represented employees as follows:
July 31, 2000 - 1,000,000 shares, January 31, 2001 - 1,000,000 shares,
January 31, 2002 - 1,000,000 shares.
In conjunction with these contracts, TWA and the IAM-represented
employees have agreed to withdraw all litigation pending as of August
1999 including contempt proceedings. Additionally, all outstanding
grievances regarding scope, work jurisdiction, outsourcing and
compensation were withdrawn as of that date. IAM-represented flight
attendant employees agreed to a payment of $25.0 million to be
distributed in a manner directed by the IAM. On August 31, 1999, $11.0
million was distributed. The remaining payments will occur on the
following dates: August 1, 2000 - $11.0 million, August 1, 2001 - $3.0
million. Similarly, in settlement of these disputed matters, IAM-
represented ground employees will receive $10.0 million to be
distributed in a manner directed by the IAM by no later than the
following dates: November 2, 2001 - $5.0 million, and August 1, 2002 -
$5.0 million. As a result of the ratification of the contract,
including settlements of the disputes discussed above, TWA recorded a
non-recurring charge to earnings in 1999 aggregating $37.8 million, net
of amounts previously accrued.
Pursuant to the labor agreements TWA entered into in 1992, TWA
agreed to pay to employees represented by the IAM a cash bonus for the
amount by which overtime incurred from September 1992 through August
1995 was reduced below specified thresholds. This amount was to be
offset by the failure of medical savings to meet certain specified
levels during the period for the same employees. TWA and the IAM came
to agreement on this obligation which was payable in three equal annual
installments. Two installments have been made through December 31,
1999. The remaining obligation of $9.1 million representing the third
and final installment is payable on September 1, 2000 and is reflected
as a liability in the consolidated financial statements.
TWA also entered into agreements subsequent to the 1992 labor
agreements that provide for an adjustment to existing salary rates of
certain labor-represented employees based on the amount of the cash
bonus for overtime to the employees represented by the IAM as described
in the previous paragraph. These adjustments equated to a 4.814%
increase which management made effective for all employee groups on
September 1, 1998, except for pilots whose contract provided for
separate increases also effective September 1, 1998. Non-contract
employees of TWA have additionally received a 3% increase in salary
effective September 1, 1999. On October 1, 1999, a merit pay plan was
put into effect which increased non-contract employee wages an average
of approximately 5%. The officers of TWA did not receive either the
1998 or 1999 increases.
TWA's agreements with employees could result in significant non-
cash charges to future operating results. Shares granted or purchased
at a discount under the Employee Stock Incentive Plan ("ESIP") will
generally result in a charge equal to the fair market value of shares
granted and the discount for shares purchased at the time these shares
are earned or purchased. As a result of the first two target prices
being realized on February 17, 1998, and March 4, 1998, respectively,
the Company issued an additional 2,377,084 shares on July 15, 1998, to
satisfy the 1997 and 1998 ESIP grant amounts. In connection with such
issuance, TWA recorded an aggregate non-cash charge in the first quarter
of 1998 in the amount of $26.5 million. An aggregate non-cash charge of
$1.0 million was recorded in the third quarter of 1998 to reflect the
actual number of shares issued on July 15, 1998. If the ESIP's
remaining target prices (ranging from $13.31 to $17.72) for TWA common
stock are realized, the minimum aggregate non-cash charge for the years
1999 to 2002 will be approximately $104.8 million based upon these
target prices and the number of shares of common stock and employee
preferred stock outstanding at December 31, 1999. The non-cash charge
for any year, however, could be substantially higher if the then market
price of TWA common stock exceeds the target prices.
TWA believes it is essential to improve employee productivity as
an offset to wage increases and will continue to explore other ways to
control and/or reduce operating expenses. While TWA experienced wage
rate increases, it also generated 3.3% more ASMs with 4.2% fewer
employees in 1999. On a unit cost basis
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(salaries, wages and benefits per ASM excluding costs associated
with contract ratification), there was no increase year over year
reflecting an overall productivity improvement in this category.
However, there can be no assurance that the Company will be successful
in sustaining such productivity improvements or achieving unit cost
reductions. It is essential that the Company's labor costs remain
favorable in comparison to its largest competitors.
TWA's passenger traffic data, for scheduled passengers only, is
shown in the table below for the indicated periods<F1>:
<TABLE>
<CAPTION>
1999 1998 1997
-------- -------- --------
<S> <C> <C> <C>
NORTH AMERICA
Passenger revenues ($ millions) $ 2,668 $ 2,562 $ 2,512
Revenue passenger miles (millions)<F2> 22,129 20,132 19,737
Available seat miles (millions)<F3> 30,517 28,796 29,341
Passenger load factor<F4> 72.5% 69.9% 67.3%
Passenger yield (cents)<F5> 12.06 cents 12.72 cents 12.73 cents
Passenger revenue per available
seat mile (cents)<F6> 8.74 cents 8.90 cents 8.56 cents
INTERNATIONAL
Passenger revenues ($ millions) $ 294 $ 333 $ 412
Revenue passenger miles (millions)<F2> 3,881 4,290 5,363
Available seat miles (millions)<F3> 5,071 5,657 7,093
Passenger load factor<F4> 76.5% 75.8% 75.6%
Passenger yield (cents)<F5> 7.56 cents 7.77 cents 7.68 cents
Passenger revenue per available
seat mile (cents)<F6> 5.79 cents 5.89 cents 5.81 cents
TOTAL SYSTEM
Passenger revenues ($ millions) $ 2,962 $ 2,895 $ 2,924
Revenue passenger miles (millions)<F2> 26,010 24,422 25,100
Available seat miles (millions)<F3> 35,588 34,453 36,434
Passenger load factor<F4> 73.1% 70.9% 68.9%
Passenger yield (cents)<F5> 11.39 cents 11.85 cents 11.65 cents
Passenger revenue per available
seat mile (cents)<F6> 8.32 cents 8.40 cents 8.03 cents
Operating cost per available seat mile (cents)<F7> 9.50 cents 9.31 cents 8.99 cents
Average daily utilization per aircraft (hours)<F8> 9.67 9.77 9.38
Aircraft in fleet being operated at end of year 183 185 185
<FN>
- --------
<F1> Excludes subsidiary companies.
<F2> The number of scheduled miles flown by revenue passengers.
<F3> The number of seats available for passengers multiplied by the
number of scheduled miles those seats are flown.
<F4> Revenue passenger miles divided by available seat miles.
<F5> Passenger revenue per revenue passenger mile.
<F6> Passenger revenue divided by scheduled available seat miles.
<F7> Operating expenses, excluding special charges, other nonrecurring
charges and subsidiaries, divided by total available
seat miles.
<F8> The average block hours flown per day in revenue service per
aircraft.
</TABLE>
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RESULTS OF OPERATIONS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1999
COMPARED TO THE FISCAL YEAR ENDED DECEMBER 31, 1998
In 1999, TWA reported an operating loss of $347.7 million and a
pre-tax loss of $351.8 million which included a charge of $37.8 million
related to the ratification of labor contracts, non-operating gains from
the sales of the Company's interests in Equant and Priceline.com which
aggregated $52.2 million and special charges of $176.8 million. These
results compare to a prior year operating loss of $65.2 million and pre-
tax loss of $107.2 million which included a non-cash charge to operating
expense of $27.5 million relating to a distribution made in July 1998 of
TWA common stock to employee stock plans pursuant to the ESIP and
special charges of $42.6 million. After extraordinary items of $0.9
million in 1999 and $13.1 million in 1998 relating to the early
retirement of debt, the Company recorded a net loss of $353.4 million in
1999 versus $120.5 million in the same period of 1998.
In 1999, total operating revenues of $3,308.7 million were $49.6
million more than the $3,259.1 million recorded in 1998. Passenger
revenues improved $66.8 million, partially offset by decreases in
revenues for freight and mail ($3.0 million), Getaway tour revenues
($10.4 million) and contract work ($5.0 million).
System-wide capacity, as measured by scheduled ASMs, increased
3.3% in 1999 from the comparable period of 1998. Domestic ASMs
increased 6.0% while International ASMs decreased 10.4%. The system
passenger load factor improved 2.2 percentage points in 1999 versus 1998
to 73.1% from 70.9%. System yield declined 3.9% to 11.39 cents in 1999
compared to 11.85 cents in 1998. TWA believes the decrease is due, in
part, to the diversion of higher yielding business passengers during the
second and third quarters of 1999 because of the uncertainty of the
outcome of labor negotiations between the Company and the IAM. RASM
decreased year over year to 8.32 cents in 1999 from 8.40 cents in the
same period of 1998. TWA has taken delivery of 39 new aircraft during
1999. In 1999, CASM continued to reflect the increase in aircraft
rental expense resulting from this change in equipment, increasing to
9.50 cents versus 9.31 cents in 1998.
Operating expenses increased $332.1 million during 1999 to
$3,656.4 million from $3,324.3 million during 1998, representing a net
change in the following expense groups:
* Salaries, wages and benefits were $1,270.6 million during
1999 compared to $1,226.4 million during the same period in
1998, an increase of $44.2 million. The average number of
full-time equivalent employees decreased 4.2% to 21,051 in
1999 versus 21,981 in 1998. This headcount reduction was
more than offset by salary increases related to a Company-
wide (except for officers and pilots) salary increase of
4.814% effective September 1, 1998, pilot salary increases
effective September 1, 1998, March 2, 1999 and September 1,
1999 as provided in their current contract, an August 1, 1999
salary increase to IAM-represented employees as provided in
their current contract, a 3% salary increase granted to non-
contract employees effective September 1, 1999 and a merit
pay increase for non-contract employees averaging
approximately 5% effective October 1, 1999. TWA employees
also received bonuses under the Flight Plan 99 program five
times during 1999 for achieving performance goals as
outlined in the program. Additionally, TWA's costs for its
group insurance plans increased $16.7 million during 1999
versus 1998 primarily reflecting increased medical costs.
Earned stock compensation charges of $27.5 million were
recorded in 1998. These charges were related to incentive
shares issued in July 1998 under the ESIP relative to the
achievement of certain common stock target prices in
February and March 1998 per agreements reached under the
1995 reorganization. No such charges were recorded in 1999.
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* Costs associated with contract ratification were $37.8
million during 1999. This represents the net charge for
non-recurring costs related to the ratification on July 22,
1999, of the labor agreements for employees represented by
the IAM. These costs include $35.0 million in litigation
and grievance settlement costs, $16.0 million for common
stock to be issued to IAM-represented employees, and $1.4
million for union advisory costs that were reimbursed by the
Company, net of amounts previously accrued. The contracts
became effective August 1, 1999. There were no similar
charges in 1998.
* Aircraft fuel and oil expense of $396.5 million in 1999 was
$51.9 million more than the $344.6 million recorded in 1998
primarily due to an increase in the average cost per gallon
to 58.4 cents in 1999 from 51.0 cents in 1998.
* Passenger sales commission expense of $180.5 million for
1999 was $17.4 million less than the expense recorded in the
same period of 1998 primarily due to:
(1) a 9.2% decrease in the average domestic commission
rate due to a reduction in domestic base commission
rates in October 1999;
(2) a 6.7% decrease in domestic commissionable tickets
sold during 1999 due to an increase in the percentage
of sales sold through non-commissionable outlets; and
(3) a 10.2% decrease in the average international
commission rates and a 6.9% decrease in international
commissionable tickets sold during 1999.
* Aircraft maintenance material and repairs expense of $142.5
million for 1999 represents an increase of $12.8 million
from $129.7 million during the same period of 1998. The
primary factors contributing to this increase were increases
in the costs of airframe materials and third party repairs,
offset in part by reduced engine material requirements.
* Depreciation and amortization expense decreased $12.1
million to $140.9 million in 1999 from $153.0 million in
1998. The decrease resulted primarily from the sale and
leaseback of B-727, B-767 and B-757 aircraft, partially
offset by the purchase of aircraft previously leased by TWA.
* Aircraft lease rentals increased $94.6 million to $425.7
million in 1999 from $331.1 million in 1998. This increase
is primarily due to the additional aircraft leased during
1998 and 1999 as part of TWA's aggressive fleet renewal
plan, in addition to the sale and leaseback of B-727, B-767
and B-757 aircraft.
* Other rent and landing fees were $199.2 million in 1999
versus $193.4 million in the same period of 1998, an
increase of $5.8 million. This increase related primarily
to increases in landing fees of $8.5 million and facilities
rentals at various airport locations of $6.3 million. A
retroactive facilities rentals charge of $9.0 million was
recorded in the third quarter of 1998 with no similar
charges in 1999, thereby favorably affecting the year over
year comparison.
Special charges increased $134.2 million to $176.8 million in 1999
from $42.6 million in 1998. The increase includes a charge related to
the closing of JFK to Madrid, Barcelona and Rome routes of $91.6 million
($79.3 million write-off of the value of the routes and $12.3 million
related to government-mandated employee severance liabilities) and $74.2
million write-off of the carrying value of TWA's New York to Paris/Tel
Aviv, New York to Lisbon and New York to Milan route authorities which,
based upon expected future cash flows, have been determined to be impaired.
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Additional charges recorded in 1999 include $7.0 million for
the reduction in carrying value of TWA's engines and spare parts
inventory which relate to aircraft retired in 1999 and $5.0 million for
the write-off of the carrying value of leasehold improvements and
equipment costs as a result of the decision to terminate the lease at JFK
Terminal 6. Offsetting decreases included the year over year change in
the provision related to the termination of aircraft leases which
aggregated $5.8 million in 1999 compared to $25.0 million in 1998.
Additionally, charges of $17.6 million were recorded in 1998 for the
restructuring of international operations and the closure of the
Los Angeles reservations office of which $6.8 million of these charges
were reversed in 1999. See Note 14 to the consolidated financial
statements for a further discussion of these special charges.
All other operating expenses of $685.9 million in 1999 versus
$705.6 million recorded in 1998 reflects a $19.7 million decrease in
expense primarily driven by decreases in corporate liability and hull
insurance resulting from lower insurance premiums during the current
policy period ($6.3 million), Getaway tours expense related to a lower
volume of tour packages sold by TWA's subsidiary, Getaway Vacations
($10.3 million), advertising related to an emphasis on effectively
targeting advertising expenditures ($5.6 million), and navigation
charges ($4.6 million). Offsetting increases occurred in various
expenses, including computerized reservation system fees ($6.2 million).
Other charges (credits) were a net charge of $4.1 million during
1999 compared to a net charge of $42.0 million in 1998. Interest
expense decreased $19.8 million in 1999 from the same period in 1998 as
a result of the retirement of certain debt in 1998 and 1999. Interest
and investment income decreased $9.6 million in 1999 primarily due to a
decrease in the level of invested funds. Net gains (losses) from the
disposition of assets were net losses of $5.2 million and net gains of
$20.1 million during 1999 and 1998, respectively. The net losses in
1999 included a loss from the sale and leaseback of B-767 aircraft, net
losses from the sale of L-1011, B-747, DC9-15 and B-727 aircraft and
engines, spare L-1011 and DC9-10 engines, partially offset by gains from
the sale of an L-1011 simulator and the sale of TWA's investment in
SATO. The net gains in 1998 were primarily related to the sale of a
B-747 simulator, L-1011 and B-747 aircraft and engines and other surplus
engines which had been retired from active service. Other charges and
credits - net improved $53.0 million in 1999 versus the same period in
1998 primarily as the result of a gain of $20.2 million from sales of
warrants to purchase 812,500 shares of Priceline.com stock, improvements
in TWA's interest in the 1999 earnings of Worldspan ($17.4 million) and
the gain from the sale of a portion of the Company's interest in Equant
N.V., a telecommunication network company which was spun off from SITA
($32.0 million). Additionally, Worldspan, an affiliate, also participated
in the divestiture of Equant, resulting in additional recognition of
gain by TWA of approximately $7.9 million as an equity participant in the
earnings of Worldspan. During the same period in 1998, a cash undertaking
previously posted by TWA of $13.7 million in an action brought by
Travellers International A.G. and its parent company, Windsor Inc. was
returned to TWA in June 1998 and recorded as non-operating income in the
second quarter 1998.
A tax provision of $0.7 million was recorded in 1999 compared to a
tax provision of $0.2 million in 1998 (see Note 6 to the consolidated
financial statements).
The Company had a net loss of $353.4 million in 1999 compared to a
net loss of $120.5 million in the same period of 1998. The results
included extraordinary charges of $0.9 million and $13.1 million in 1999
and 1998, respectively, related to the early extinguishment of debt.
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RESULTS OF OPERATIONS FOR THE FISCAL YEAR ENDED DECEMBER 31, 1998
COMPARED TO THE FISCAL YEAR ENDED DECEMBER 31, 1997
Total operating revenues of $3,259.1 million for 1998 were $68.9
million or 2.1% less than the total operating revenues of $3,328.0
million for the year ended December 31, 1997. The decrease was
primarily reflected in TWA passenger revenues, which were $28.8 million
less than in 1997; domestic passenger revenue increased year over year
by $49.7 million, however, international passenger revenue decreased by
$78.5 million resulting from the reduction of certain unprofitable
international operations and the planned reduction in capacity as the
Company replaced older L-1011 and B-747 aircraft with new B-757 and
B-767 aircraft on many routes. Revenue from freight and mail also
decreased $24.3 million as a result of the reduction in capacity.
Additionally, revenues from contract work decreased $8.6 million
primarily due to an overall reduction in third party maintenance as the
Company focused its resources on maintenance of its own aircraft.
As a result of the Company's planned retirement of older widebody
aircraft and elimination of unprofitable services, capacity and traffic
decreased in 1998 as compared to 1997. System-wide capacity, measured
in available seat miles flown in scheduled service, decreased by 5.4% in
1998 as compared to 1997 (reflecting a 1.9% decrease in domestic
available seat miles and a 20.2% decrease in international available
seat miles). Passenger traffic volume, as measured by total revenue
passenger miles in scheduled service, decreased 2.7% in 1998 over 1997.
Passenger load factor for 1998 was 70.9% compared to 68.9% in 1997.
TWA's yield per revenue passenger mile increased to 11.85 cents in 1998
from 11.65 cents in 1997. Overall, revenues generated as a result of
moderate year over year increases in load factor and yield from 1997 to
1998, while reflecting TWA's emphasis on improving system yield, were
not sufficient to offset the decline in capacity.
Operating expenses decreased to $3,324.3 million (including $42.6
million in special charges) in 1998, $32.9 million (1.0%) less than the
total operating expenses of $3,357.2 million for the year ended December
31, 1997, representing a net change in the following expense groups:
* Salaries, wages and benefits were $1,226.4 million during
1998 compared to $1,228.3 million during 1997, a decrease of
$1.9 million, primarily due to a decrease in the average
number of employees, partially offset by increases in wage
rates and earned stock compensation charges. The average
number of employees declined 6.1% to 21,981 in 1998 compared
to 23,413 in 1997. A reduction of the number of employees
occurred in several areas, particularly those impacted by
the reduction in flying or maintenance of older narrow and
widebody aircraft. Earned stock compensation charges of
$27.5 million for 1998 versus $4.2 million for 1997
represent the non-cash compensation charge recorded to
reflect the expense associated with the distribution of
shares of stock on behalf of employees as part of the 1995
reorganization. The 1998 charge is related to incentive
shares issued in July 1998 under the ESIP as a result of the
achievement of certain common stock target prices in
February and March 1998. The 1997 charge is related to the
allocation of shares to the pilots' employee benefit plan
(the "ESOP"), which became fully allocated in 1997.
* Aircraft fuel and oil expense of $344.6 million for 1998 was
$136.3 million (28.3%) less than expenses of $480.9 million
for 1997. Approximately $100.9 million of the decrease was
due to a reduction in the average cost of fuel from 65.9
cents per gallon in 1997 to 51.0 cents per gallon in 1998.
The remaining $35.4 million decrease was due to the
reduction in gallons consumed (675.8 million gallons in 1998
compared to 730.3 million gallons in 1997) resulting from
the replacement of B-747, L-1011 and B-727 aircraft with
more fuel efficient B-757, B-767 and MD-80 aircraft and the
elimination of certain unprofitable international routes.
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<PAGE>
* Passenger sales commission expense of $197.9 million for
1998 was $44.2 million (18.3%) less than the expense of
$242.1 million in 1997 primarily due to:
(1) a 23.9% decrease in average domestic commission
rates due to a reduction in domestic base
commission rates in October 1997 and a
commission cap implemented in May 1998;
(2) a 7.8% decrease in domestic commissionable
tickets sold during 1998 versus 1997, resulting
in part from an increase in electronic
ticketing; and
(3) a decrease in commissions on international
passenger revenues, which declined 19.1% as the
Company continued to restructure its
international operations.
* Aircraft maintenance material and repairs expense of $129.7
million for 1998 represented a decrease of $8.7 million
(6.3%) from $138.4 million for 1997. The decrease was
primarily the result of higher levels of maintenance on
narrow-body aircraft during 1997, reduced material usage on
wide-body aircraft and engines in 1998 due to the retirement
of the B-747 and L-1011 fleets, a reduction in unprofitable
contract maintenance work performed on both government and
commercial aircraft and engines, and the effect of adding
new lower maintenance B-757, B-767 and MD-80 aircraft to the
fleet.
* Depreciation and amortization expense increased $2.6 million
(1.7%) in 1998 to $153.0 million compared to $150.4 million
in 1997. Depreciation of aircraft increased $7.7 million
primarily as a result of the purchase of five B-767 aircraft
previously leased by TWA under operating leases from the end
of 1997 through the first six months of 1998, which was
partially offset by reduced depreciation, amortization and
obsolescence provided for the B-747 and L-1011 fleets, which
were retired.
* Aircraft lease rentals increased $68.3 million to $331.1
million in 1998 from $262.8 million in 1997 due primarily to
the addition of new B-757 and MD-80 aircraft leases in 1998
which replaced older L-1011 and B-747 wide-body aircraft and
B-727 aircraft retired from the fleet.
* Other rent and landing fees increased $17.9 million to
$193.4 million in 1998 from $175.5 million in 1997 primarily
related to a non-recurring charge of $9.0 million for
certain retroactive facilities rentals in addition to
increased space rentals at other airports.
During the fourth quarter of 1998, special charges of $42.6
million were recorded in connection with the elimination of excess
overhead items and the Company's ongoing fleet renewal program. These
charges included $25.0 million related to the planned retirement of
B-727 and non-hushkitted DC-9 fleets and $17.6 million for the ongoing
restructuring of international operations and the closure of the
Los Angeles reservations office, both of which include significant
employee severance costs. See Note 14 to the consolidated financial
statements for a further discussion of these special charges.
All other operating expenses increased $26.7 million to $705.6
million in 1998 from $678.9 million during the year ended December 31,
1997. Expenses increased in several categories including computerized
reservation system fees ($11.0 million), passenger food and beverage
expense ($5.8 million) primarily related to a 35.8% increase in first
class enplaned passengers and associated improved menu offerings,
Worldspan transaction fees ($5.6 million), advertising and publicity
primarily associated with the launch of new TWA services including
"Trans World First", "TWQ" and the "Aviators" frequent flier program
($5.9 million), legal fees and expenses ($7.3 million) and uncollectible
accounts ($3.2 million). Offsetting decreases occurred as a result of
lower insurance premiums and uninsured losses ($9.8 million) and
expenses related to TWA's
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<PAGE>
subsidiary, Getaway Vacations, ($5.9 million).
Other charges (credits) were a net charge of $42.0 million for
1998, compared to $60.1 million for 1997. Interest expense increased
$2.9 million in 1998 over 1997 as a result of the addition of new debt
during 1998 and the latter part of 1997. Interest and investment income
increased by $10.4 million in 1998 primarily as a result of higher
levels of invested funds. Dispositions of assets resulted in net gains
of $20.1 million in 1998, compared to $16.0 million in 1997. The net
gains in 1998 primarily included the sale of certain retired, wide-body
aircraft, engines and other surplus equipment while the net gains in
1997 related to the sale of three gates at Newark International Airport
and spare flight equipment. Other charges and credits-net improved by
$6.4 million to a net credit of $29.8 million for 1998 from a net credit
of $23.4 million for 1997. In May 1998, the U.S. Supreme Court refused
to hear an appeal of a decision reversing a 1991 judgment against TWA in
an action brought by Travellers. Accordingly, a cash undertaking
previously posted by TWA of $13.7 million was returned to TWA in June
1998 and recorded as a credit in the second quarter. After deduction of
$3.3 million for reimbursement of certain administrative costs
previously incurred by TWA, $10.4 million received pursuant to this
proceeding was applied in July 1998 to reduce the promissory notes
issued to the Pension Benefit Guaranty Corporation ("PBGC Notes")
pursuant to a pre-existing agreement. Partially offsetting this
favorable change was a decrease in TWA's equity in the earnings of
Worldspan ($2.2 million) and an increase in provisions for losses
resulting from claims and litigation judgments against TWA ($1.2
million).
The provision for income taxes in 1998 and 1997 related primarily
to foreign taxes. In future periods, the amortization of reorganization
value in excess of amounts allocable to identifiable assets and certain
other non-deductible items will likely result in the Company's effective
tax rate for financial reporting purposes exceeding statutory rates,
notwithstanding the Company's substantial net operating loss
carryforwards. See Note 5 to the consolidated financial statements.
As a result of the above, the operating loss of $65.2 million for
1998 was $35.9 million greater than the operating loss of $29.3 million
for 1997 and the net loss of $120.5 million for 1998 was $9.7 million
greater than the net loss of $110.8 million for 1997. The operating and
net losses for 1998 included special charges for nonrecurring items of
$42.6 million as further described in Note 14 to the Consolidated
Financial Statements. The 1998 net loss also included $13.1 million in
extraordinary charges related to the early extinguishment of debt while
the 1997 net loss included $21.0 million of such charges.
LIQUIDITY AND CAPITAL RESOURCES
The following is a discussion of the impact of significant factors
affecting TWA's liquidity position and capital resources. These
comments should be read in conjunction with, and are qualified in their
entirety by, the consolidated financial statements and notes thereto.
LIQUIDITY
The Company's consolidated cash and cash equivalents balance at
December 31, 1999 was $180.4 million, a $72.0 million decrease from the
December 31, 1998 balance. The decrease in consolidated cash and cash
equivalents balance would have been larger except for several
transactions in 1999, including the receipt of $32.0 million related to
the sale of a portion of TWA's interest in Equant N.V., $20.2 million
related to the sale of warrants for the purchase of Priceline.com stock
and a net cash distribution of $14.2 million in respect of the Company's
partnership interest in Worldspan.
While the net loss increased substantially in 1999 as compared to
1998, cash used in operating activities decreased to $3.2 million in
1999 versus an $82.6 million use of cash in 1998. Cash provided by
operating activities in 1999 includes $32.0 million related to the sale
of a portion of TWA's shares of Equant N.V., a telecommunications
network company and $20.2 million related to the sale of warrants for
the purchase of Priceline.com stock. In 1998, $131.8 million in net
discounted sales from tickets sold under the Karabu ticket agreement
were excluded from cash flows from operating activities as the related
amounts were applied to reduce the PBGC Notes. In December 1998, the
PBGC Notes were paid in full primarily with the proceeds from tickets
sold under the Karabu ticket program. Additionally, changes in
operating assets and liabilities provided cash of $27.4 million in 1999,
as compared to 1998 when such items were a use of cash of $41.4 million.
Increases in accounts payable and accrued expenses, as a result of the
timing of payments of such items, represented most of the year over year
changes.
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<PAGE>
Cash provided by investing activities was $1.0 million in 1999
versus cash used of $34.6 million in 1998. In November 1999 Worldspan
distributed $250 million to its partners. TWA's share of this
distribution was approximately $65.8 million of which approximately
$51.6 million was used to pay off an outstanding note and related
accrued interest due to Worldspan which was secured by TWA's 26.315%
interest in Worldspan (see Note 4). The remaining $14.2 million was
received in cash. Components of cash used in 1999 include the purchase
of one Boeing 767-200 aircraft and related engines for $27.1 million,
which were subsequently sold to and leased back from an aircraft lessor
in April 1999. Additionally, other capital expenditures (including
aircraft pre-delivery deposits) during 1999 amounted to $113.1 million.
Asset sales during both periods were primarily limited to retired, wide-
body aircraft, engines and other surplus equipment. Additionally,
approximately $23.4 million was provided in 1999 primarily due to the
return of pre-delivery deposits relating to five new Boeing 757-200
aircraft delivered in 1999, which were immediately sold to and leased
back under operating leases from the aircraft lessors.
Cash used by financing activities was $69.8 million in 1999 versus
cash provided of $131.9 million in the same period of 1998. Proceeds
from the sale and leaseback of certain aircraft were $142.9 million in
1999 versus $261.9 million in 1998. In addition, sources of cash
generated by financing activities in 1998 included proceeds from the
sale of notes of $144.9 million. Repayments of long-term debt and
capital lease obligations totaled $254.0 million in 1998 and $189.7
million in 1999.
The Company's ability to improve its operating results and
financial position will depend on a variety of factors, several of which
are described below, and some of which are outside of management's
control. The Company will face higher full year labor costs in 2000 as
a result of new labor contracts entered into in 1999 and scheduled
increases in 2000 offset, in part, by an anticipated reduction in head
count achieved primarily through attrition. In addition, jet fuel costs
have recently increased substantially, with prices currently at their
highest level in nine years. The Company has not hedged the cost of any
of its future fuel requirements and accordingly, until such prices abate
or unless the fuel surcharge previously imposed by the Company is
sufficient to cover such higher costs, such additional costs will
adversely affect its operating results. Due to seasonal factors, the
Company has historically suffered its greatest losses and the Company's
cash balances during the first quarter of each year are typically lower
than in other periods. These seasonal factors when combined with the
trend of unfavorable year over year quarterly operating comparisons
experienced by the Company in 1999 are expected to continue in the first
quarter of 2000. The Company's ability to maintain adequate liquidity
to assure viability will depend on its ability to improve its operating
results by generating increased revenues and controlling costs or, if
insufficient, on its ability to attract new capital and, if necessary,
sell or finance assets such as its interest in Worldspan and Equant.
For a discussion of key initiatives in the Company's strategic plan. See
"Item 1, Business - Business Strategy."
CAPITAL RESOURCES
TWA 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 borrowings or from sales of assets.
Substantially all of TWA's strategic assets, including its owned
aircraft, ground equipment, gates and slots have been pledged to secure
various issues of outstanding indebtedness of the Company. Sales of
such assets which are not replaced would, under the terms of the
applicable financing agreements, generally require payment of the
proceeds from such dispositions or payment of the indebtedness secured
thereby. TWA has relatively few non-strategic assets which it could
monetize, many of such assets being subject to various liens and
security interests which would restrict and/or limit the ability of TWA
to realize any significant proceeds from the sale thereof.
The Company believes that its 26.315% interest in Worldspan has
substantial value, net of certain encumbrances. In addition, following
the sale of Equant shares as described above TWA holds additional
unencumbered depository certificates that while currently restricted as
to transferability may become convertible into 240,176 common shares in
Equant N.V. The shares underlying these certificates had an estimated
fair value of approximately $26.7 million at December 31, 1999 based on
the trading price of the common stock. The Company is currently
considering various alternatives to monetize these assets.
Should the Company require additional liquidity and be unable to
monetize its holdings in Worldspan and Equant in a timely manner and
should its access to capital from outside sources be constrained, the
Company may not be able to make certain capital expenditures or
implement certain other aspects of its strategic plan, and the Company
may therefore be unable to achieve the full benefits expected therefrom.
This could adversely affect TWA's operations and future viability.
The outstanding balance of the Company's 9.8% Airline Receivable Asset
Backed Notes, aggregating $100 million, mature beginning in January 2001
and would require repayment within 60 days unless their maturity date is
extended or is refinanced. The Company intends to extend or refinance
this obligation, although no assurance can be given that it will be
successful in this regard. However, these Asset Backed Notes are
secured by collateral with an average value in 1999 of over $175 million
which the Company believes should be sufficient to allow such financing.
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<PAGE>
Commitments
Since 1996, TWA has entered into agreements with the manufacturer
and various operating lessors to acquire a total of 27 B-757 aircraft.
As of December 31, 1999, TWA has taken delivery of 26 B-757 aircraft
with ten of those aircraft delivered in 1999. The final B-757 aircraft
under these agreements was delivered in January 2000. Of the 27 B-757
aircraft, 25 are leased by TWA and two are owned by TWA with 80%
financing.
The Company entered into an agreement for operating leases for one
additional B-767-300ER and three additional B-757-200 aircraft. The
B-767-300ER was delivered in August 1999.
In 1996, TWA entered into an agreement to acquire from Boeing 15
new MD-83s, to be financed by long-term leases. The final aircraft
under this agreement was received in February 1999.
In April 1998, TWA entered into an agreement with Boeing to
acquire 24 additional new MD-83 aircraft and obtained commitments for
lease financing for these aircraft. TWA has received all 24 aircraft as
of December 31, 1999.
In December 1998, TWA signed letters of intent to acquire an
additional 125 new Boeing and Airbus aircraft and options for an
additional 125 Boeing and Airbus aircraft. TWA finalized the terms of
the purchase orders for 50 Boeing 717-200 aircraft in June of 1999 and
the terms of options for an additional 50 B717-200 aircraft and
definitive agreements were signed at that time. Financing agreements on
these B717-200 aircraft were also finalized in June of 1999. The first
B717-200 aircraft was delivered in February 2000. Both the Boeing 717
and the Airbus 318 and "A320 Family" financing commitments are subject to
a "material adverse change" clause. Those provisions are comparable to
those contained in prior agreements for the acquisition of B757 and MD-80
aircraft. Such provisions generally allow the manufacturer to withdraw
the financing commitment on one or more undelivered aircraft in the event
there is a material adverse change in the financial condition of TWA
which would adversely affect TWA's ability to perform under the purchase
order, financing documentation or any related transaction. In the event
Boeing or Airbus withdraws its financing commitment with respect to one
or more of the aircraft, TWA has a comparable right to terminate the
purchase order for those aircraft.
In December 1999, TWA finalized the terms of the purchase orders
for 38 A318 aircraft and the terms of options for an additional 75
"A320 Family" aircraft and definitive agreements were signed at that
time. Predelivery payments were made by TWA in December 1999 and
January 2000 for A318 aircraft, totaling approximately $8.9 million;
no further predelivery payments will be required until 2002. Financing
agreements on these aircraft were also finalized in December of 1999.
Deliveries of the firm 38 aircraft are scheduled to commence in 2004.
Terms and conditions of the lease of the remaining 12 A318 aircraft
announced in December 1998 are subject to further negotiation and the
signing of definitive agreements with an operating lessor. Finalizing
of orders for the remaining 25 "A320 Family" aircraft is currently under
negotiation; TWA anticipates that it will be required to pay in 2000
approximately $7.0 million in predelivery payments for these aircraft.
These aircraft would primarily replace B-727, DC-9 and MD-80 aircraft
currently in TWA's fleet.
In 1989, TWA entered into agreements with AVSA, S.A.R.L.
("Airbus") and Rolls Royce plc relating to the purchase of ten A330-300
wide-body aircraft and related engines, spare parts and equipment.
These agreements have been terminated by mutual agreement of all
parties.
In April 1999, TWA sold and leased back four Boeing 767-200
aircraft and completed a sale/leaseback in July 1999 of a fifth such
aircraft. These five Boeing 767-200 aircraft will be replaced with
three Boeing 767-300 aircraft from the same aircraft lessor. As of
December 31, 1999, two B-767-200 aircraft had been returned and one
B-767-300 aircraft has been leased. The three additional B-767-200
aircraft will be returned in 2000. The two additional B-767-300
aircraft will be delivered in 2000. In connection with this
transaction, the Company purchased $28.8 million total principal amount
of its outstanding 11 3/8% Senior Secured Notes due April 15, 2003
and all of its outstanding 10 1/4% Senior Secured Notes due June 15, 2003
which totaled $14.5 million.
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<PAGE>
TWA elected to comply with the transition requirements of the
Noise Act by adopting the Stage 2 aircraft phase-out/retrofit option,
which required that 50% of its base level (December 1990) Stage 2 fleet
be phased-out/retrofitted by December 31, 1996. To comply with the 1996
requirement, the Company retrofitted, by means of engine hush-kits, 30
of its DC-9 aircraft at an aggregate cost of approximately $55.5
million, most of which was financed by lessors with repayments being
facilitated through increased rental rates or lease term extensions. On
December 31, 1999, 100% of TWA's fleet met Stage 3 requirements as
required.
Certain Other Capital Requirements
TWA generally does not commit to expenditures for facilities and
equipment, other than aircraft, before purchase and, therefore, no such
significant commitments exist at the present time. TWA's ability to
finance these expenditures will depend in part on TWA's financial
condition at the time of the proposed expenditure.
Restructuring Liabilities
At December 31, 1998, TWA established a provision related to the
restructuring of its international operations and the closure of the
Los Angeles Reservation Office. The Company recorded a special charge
of approximately $17.6 million primarily related to employee severance
liabilities. During 1999, the Company incurred approximately $4.2
million of expenditures related to these provisions. The Company
continues to expect severance costs of $6.6 million to be paid to the
affected respective employees during the first half of 2000 due to these
changes in operations.
During 1999, however, the plans related to restructuring
international operations were overtaken by the serious deterioration in
performance on the JFK to Madrid, Barcelona, and Rome routes. In the
fourth quarter of 1999, the decision was made by the Board of Directors
to close these three routes. TWA established a provision related to
these closures of approximately $91.6 million which included $79.3
million write-off of the value of the routes, and $12.3 million
primarily related to government-mandated employee severance
liabilities. The Company expects these severance costs to be paid
during 2000. (See Note 14.)
Year 2000
The Company utilizes software and related computer technologies
essential to its operations that use two digits rather than four to
specify the year, which were predicted to result in a date recognition
problem in the year 2000 and thereafter unless modified. Since January
1, 2000, TWA has experienced no material impact of its systems or
operations as a result of the year 2000 problem.
The Company estimates that the total cost to complete the
remediation of its information technology systems was approximately
$15.1 million, which was approximately 15% of the Company's total
information technology budget for the two years during which the project
was completed. TWA will keep its year 2000 technical team in place to
continue to monitor its operations.
Availability of NOLs
TWA estimates that it had, for federal income tax purposes, net
operating loss carryforwards ("NOLs") amounting to approximately $1,128
million at December 31, 1999. Such NOLs expire in 2008 through 2019 if
42
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<PAGE>
not utilized before then to offset taxable income. Section 382 of the
Internal Revenue Code of 1986, as amended, and regulations issued
thereunder impose limitations on the ability of corporations to use NOLs
if the corporation experiences a more than 50% change in ownership
during certain periods. Changes in ownership in future periods could
substantially restrict the Company's ability to utilize its tax net
operating loss carryforwards. The Company believes that no such
ownership change has occurred subsequent to the 1995 reorganization.
There can be no assurance, however, that such an ownership change will
not occur in the future. In addition, the NOLs are subject to
examination by the Internal Revenue Service ("IRS") and, thus, are
subject to adjustment or disallowance resulting from any such IRS
examination. For financial reporting purposes, the tax benefits related
to the utilization of the tax net operating loss carryforwards generated
prior to the 1995 reorganization of approximately $491 million will, to
the extent realized in future periods, have no impact on the Company's
operating results, but instead be applied to reduce reorganization value
in excess of amounts allocable to identifiable assets.
New Accounting Pronouncements
In June 1998, the Financial Accounting Standards Board issued
Statement No. 133, "Accounting for Derivative Instruments and Hedging
Activities". This statement establishes accounting and reporting
standards for derivative instruments and all hedging activities. It
requires that an entity recognize all derivatives as either assets or
liabilities at their fair values. Accounting for changes in the fair
value of a derivative depends on its designation and effectiveness. For
derivatives that qualify as effective hedges, the change in fair value
will have no impact on earnings until the hedged item affects earnings.
For derivatives that are not designated as hedging instruments, or for
the ineffective portion of a hedging instrument, the change in fair
value will affect current period earnings. With the deferral of the
effective date of Statement No. 133, the Company will adopt this
standard during its first quarter of fiscal 2001 and does not presently
believe that it will have a significant effect on its results of
operations or cash flows.
In December 1999, The Securities and Exchange Commission issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in
Financial Statements". This statement summarizes certain staff views
in applying generally accepted accounting principles to revenue
recognition in financial statements. The SAB provides additional
guidance regarding when revenue is realized, earned and properly
recognized. The Company is evaluating the guidance contained in the
SAB to determine whether it impacts the Company's revenue recognition
practices and currently expects this guidance will be applicable to the
recognition of revenue related to the sale of Aviator miles to business
partners. Presently, the total purchase price of Aviator miles was
recognized as revenue during the month of sale, net of the estimated
incremental cost of providing future air travel. Based on guidance in
the SAB, the revenue will be deferred and recognized over the period
in which transportation will be provided. The Company plans to adopt any
changes to its policies to comply with the SAB in the first quarter of
fiscal 2000. The Company is presently unable to estimate the amount, but
expects the cumulative effect of the change will result in a material
charge to earnings.
43
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
TRANS WORLD AIRLINES, INC.
Dated: February 24, 2000 By: /s/ Michael J. Palumbo
----------------------------------
Michael J. Palumbo
Executive Vice President and Chief
Financial Officer (Duly authorized
representative of registrant)
<PAGE>
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15(d) of the Securities
Exchange Act of 1934, the registrant has duly caused this report to be
signed on its behalf by the undersigned, thereunto duly authorized.
February 22, 2000 TRANS WORLD AIRLINES, INC.
By: /s/ William F. Compton
----------------------
President and Chief
Executive Officer
Pursuant to the requirements of the Securities Exchange Act of 1934,
this report has been signed below by the following persons on behalf of the
registrant and in the capacities and on the dates indicated.
<TABLE>
<CAPTION>
Signature Title Date
--------- ----- ----
<S> <C> <C>
/s/ William F. Compton Director, President and Chief February 22, 2000
- ---------------------------- Executive Officer (Principal
William F. Compton Executive Officer)
/s/ Michael J. Palumbo Executive Vice President and Chief February 22, 2000
- ---------------------------- Financial Officer (Principal
Michael J. Palumbo Financial Officer and Principal
Accounting Officer)
<F*>/s/ John W. Bachmann Director February 22, 2000
- ----------------------------
John W. Bachmann
<F*>/s/ Eugene P. Conese Director February 22, 2000
- ----------------------------
Eugene P. Conese
<F*>/s/ Sherry L. Cooper Director February 22, 2000
- ----------------------------
Sherry L. Cooper
<F*>/s/ Gerald L. Gitner Director February 22, 2000
- ----------------------------
Gerald L. Gitner
<F*>/s/ Edgar M. House Director February 22, 2000
- ----------------------------
Edgar M. House
<F*>/s/ Thomas H. Jacobsen Director February 22, 2000
- ----------------------------
Thomas H. Jacobsen
Z-1
<PAGE>
<PAGE>
<F*>/s/ Myron Kaplan Director February 22, 2000
- ----------------------------
Myron Kaplan
<F*>/s/ David M. Kennedy Director February 22, 2000
- ----------------------------
David M. Kennedy
<F*>/s/ Merrill A. McPeak Director February 22, 2000
- ----------------------------
Merrill A. McPeak
<F*>/s/ Thomas F. Meagher Director February 22, 2000
- ----------------------------
Thomas F. Meagher
<F*>/s/ William O'Driscoll Director February 22, 2000
- ----------------------------
William O'Driscoll
<F*>/s/ Robert A. Pastore Director February 22, 2000
- ----------------------------
Robert A. Pastore
<F*>/s/ G. Joseph Reddington Director February 22, 2000
- ----------------------------
G. Joseph Reddington
<F*>/s/ Blanche M. Touhill Director February 22, 2000
- ----------------------------
Blanche M. Touhill
<FN>
<F*>By:/s/ Kathleen A. Soled
---------------------
Attorney-in-fact
</TABLE>
Z-2
<PAGE>
EXHIBIT 24
----------
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, John W. Bachmann, a
Director of TRANS WORLD AIRLINES, INC., a Delaware corporation, do
constitute and appoint William F. Compton, Kathleen A. Soled and Michael
J. Palumbo, and each of them, my true and lawful attorneys-in-fact, with
full power of substitution and resubstitution, for me and in my name, on
my behalf and in my stead, in any and all capacities, to sign, pursuant
to the requirements of the Securities Exchange Act of 1934, the Annual
Report on Form 10-K for TRANS WORLD AIRLINES, INC. for the fiscal year
ended December 31, 1999, and to file such Annual Report on Form 10-K
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 and
supplements to said Annual Report on Form 10-K, incorporating such
changes as any of the said attorneys-in-fact deems appropriate, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
or her substitute or substitutes, may do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of
February, 2000.
/s/ John W. Bachmann
--------------------
John W. Bachmann
<PAGE>
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Eugene P. Conese, a Director
of TRANS WORLD AIRLINES, INC., a Delaware corporation, do constitute and
appoint William F. Compton, Kathleen A. Soled and Michael J. Palumbo, and
each of them, my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution, for me and in my name, on my behalf and in
my stead, in any and all capacities, to sign, pursuant to the requirements
of the Securities Exchange Act of 1934, the Annual Report on Form 10-K for
TRANS WORLD AIRLINES, INC. for the fiscal year ended December 31, 1999, and
to file such Annual Report on Form 10-K 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 and supplements to said Annual Report on
Form 10-K, incorporating such changes as any of the said attorneys-in-fact
deems appropriate, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitute or substitutes, may do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of
February, 2000.
/s/ Eugene P. Conese
--------------------
Eugene P. Conese
<PAGE>
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Sherry L. Cooper, a
Director of TRANS WORLD AIRLINES, INC., a Delaware corporation, do
constitute and appoint William F. Compton, Kathleen A. Soled and Michael
J. Palumbo, and each of them, my true and lawful attorneys-in-fact, with
full power of substitution and resubstitution, for me and in my name, on
my behalf and in my stead, in any and all capacities, to sign, pursuant
to the requirements of the Securities Exchange Act of 1934, the Annual
Report on Form 10-K for TRANS WORLD AIRLINES, INC. for the fiscal year
ended December 31, 1999, and to file such Annual Report on Form 10-K
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 and
supplements to said Annual Report on Form 10-K, incorporating such
changes as any of the said attorneys-in-fact deems appropriate, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
or her substitute or substitutes, may do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of
February, 2000.
/s/ Sherry L. Cooper
--------------------
Sherry L. Cooper
<PAGE>
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Gerald L. Gitner, a Director
of TRANS WORLD AIRLINES, INC., a Delaware corporation, do constitute and
appoint William F. Compton, Kathleen A. Soled and Michael J. Palumbo, and
each of them, my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution, for me and in my name, on my behalf and in
my stead, in any and all capacities, to sign, pursuant to the requirements
of the Securities Exchange Act of 1934, the Annual Report on Form 10-K for
TRANS WORLD AIRLINES, INC. for the fiscal year ended December 31, 1999, and
to file such Annual Report on Form 10-K 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 and supplements to said Annual Report on
Form 10-K, incorporating such changes as any of the said attorneys-in-fact
deems appropriate, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitute or substitutes, may do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of
February, 2000.
/s/ Gerald L. Gitner
--------------------
Gerald L. Gitner
<PAGE>
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Edgar M. House, a Director
of TRANS WORLD AIRLINES, INC., a Delaware corporation, do constitute and
appoint William F. Compton, Kathleen A. Soled and Michael J. Palumbo, and
each of them, my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution, for me and in my name, on my behalf and in
my stead, in any and all capacities, to sign, pursuant to the requirements
of the Securities Exchange Act of 1934, the Annual Report on Form 10-K for
TRANS WORLD AIRLINES, INC. for the fiscal year ended December 31, 1999, and
to file such Annual Report on Form 10-K 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 and supplements to said Annual Report on
Form 10-K, incorporating such changes as any of the said attorneys-in-fact
deems appropriate, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitute or substitutes, may do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of
February, 2000.
/s/ Edgar M. House
------------------
Edgar M. House
<PAGE>
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Thomas H. Jacobsen, a
Director of TRANS WORLD AIRLINES, INC., a Delaware corporation, do
constitute and appoint William F. Compton, Kathleen A. Soled and Michael J.
Palumbo, and each of them, my true and lawful attorneys-in-fact, with full
power of substitution and resubstitution, for me and in my name, on my
behalf and in my stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Exchange Act of 1934, the Annual Report on
Form 10-K for TRANS WORLD AIRLINES, INC. for the fiscal year ended December
31, 1999, and to file such Annual Report on Form 10-K 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 and supplements to said
Annual Report on Form 10-K, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all
that each of said attorneys-in-fact, or his or her substitute or
substitutes, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of
February, 2000.
/s/ Thomas H. Jacobsen
----------------------
Thomas H. Jacobsen
<PAGE>
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Myron Kaplan, a Director of
TRANS WORLD AIRLINES, INC., a Delaware corporation, do constitute and
appoint William F. Compton, Kathleen A. Soled and Michael J. Palumbo, and
each of them, my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution, for me and in my name, on my behalf and in
my stead, in any and all capacities, to sign, pursuant to the requirements
of the Securities Exchange Act of 1934, the Annual Report on Form 10-K for
TRANS WORLD AIRLINES, INC. for the fiscal year ended December 31, 1999, and
to file such Annual Report on Form 10-K 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 and supplements to said Annual Report on
Form 10-K, incorporating such changes as any of the said attorneys-in-fact
deems appropriate, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitute or substitutes, may do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of
February, 2000.
/s/ Myron Kaplan
----------------
Myron Kaplan
<PAGE>
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, David M. Kennedy, a Director
of TRANS WORLD AIRLINES, INC., a Delaware corporation, do constitute and
appoint William F. Compton, Kathleen A. Soled and Michael J. Palumbo, and
each of them, my true and lawful attorneys-in-fact, with full power of
substitution and resubstitution, for me and in my name, on my behalf and in
my stead, in any and all capacities, to sign, pursuant to the requirements
of the Securities Exchange Act of 1934, the Annual Report on Form 10-K for
TRANS WORLD AIRLINES, INC. for the fiscal year ended December 31, 1999, and
to file such Annual Report on Form 10-K 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 and supplements to said Annual Report on
Form 10-K, incorporating such changes as any of the said attorneys-in-fact
deems appropriate, hereby ratifying and confirming all that each of said
attorneys-in-fact, or his or her substitute or substitutes, may do or cause
to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of
February, 2000.
/s/ David M. Kennedy
--------------------
David M. Kennedy
<PAGE>
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Merrill A. McPeak, a
Director of TRANS WORLD AIRLINES, INC., a Delaware corporation, do
constitute and appoint William F. Compton, Kathleen A. Soled and Michael J.
Palumbo, and each of them, my true and lawful attorneys-in-fact, with full
power of substitution and resubstitution, for me and in my name, on my
behalf and in my stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Exchange Act of 1934, the Annual Report on
Form 10-K for TRANS WORLD AIRLINES, INC. for the fiscal year ended December
31, 1999, and to file such Annual Report on Form 10-K 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 and supplements to said
Annual Report on Form 10-K, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all
that each of said attorneys-in-fact, or his or her substitute or
substitutes, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of
February, 2000.
/s/ Merrill A. McPeak
---------------------
Merrill A. McPeak
<PAGE>
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Thomas F. Meagher, a
Director of TRANS WORLD AIRLINES, INC., a Delaware corporation, do
constitute and appoint William F. Compton, Kathleen A. Soled and Michael J.
Palumbo, and each of them, my true and lawful attorneys-in-fact, with full
power of substitution and resubstitution, for me and in my name, on my
behalf and in my stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Exchange Act of 1934, the Annual Report on
Form 10-K for TRANS WORLD AIRLINES, INC. for the fiscal year ended December
31, 1999, and to file such Annual Report on Form 10-K 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 and supplements to said
Annual Report on Form 10-K, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all
that each of said attorneys-in-fact, or his or her substitute or
substitutes, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 21st day of
February, 2000.
/s/ Thomas F. Meagher
---------------------
Thomas F. Meagher
<PAGE>
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, William O'Driscoll, a
Director of TRANS WORLD AIRLINES, INC., a Delaware corporation, do
constitute and appoint William F. Compton, Kathleen A. Soled and Michael
J. Palumbo, and each of them, my true and lawful attorneys-in-fact, with
full power of substitution and resubstitution, for me and in my name, on
my behalf and in my stead, in any and all capacities, to sign, pursuant
to the requirements of the Securities Exchange Act of 1934, the Annual
Report on Form 10-K for TRANS WORLD AIRLINES, INC. for the fiscal year
ended December 31, 1999, and to file such Annual Report on Form 10-K
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 and
supplements to said Annual Report on Form 10-K, incorporating such
changes as any of the said attorneys-in-fact deems appropriate, hereby
ratifying and confirming all that each of said attorneys-in-fact, or his
or her substitute or substitutes, may do or cause to be done by virtue
hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 22nd day of
February, 2000.
/s/ William O'Driscoll
----------------------
William O'Driscoll
<PAGE>
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Robert A. Pastore, a
Director of TRANS WORLD AIRLINES, INC., a Delaware corporation, do
constitute and appoint William F. Compton, Kathleen A. Soled and Michael J.
Palumbo, and each of them, my true and lawful attorneys-in-fact, with full
power of substitution and resubstitution, for me and in my name, on my
behalf and in my stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Exchange Act of 1934, the Annual Report on
Form 10-K for TRANS WORLD AIRLINES, INC. for the fiscal year ended December
31, 1999, and to file such Annual Report on Form 10-K 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 and supplements to said
Annual Report on Form 10-K, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all
that each of said attorneys-in-fact, or his or her substitute or
substitutes, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of
February, 2000.
/s/ Robert A. Pastore
---------------------
Robert A. Pastore
<PAGE>
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, G. Joseph Reddington, a
Director of TRANS WORLD AIRLINES, INC., a Delaware corporation, do
constitute and appoint William F. Compton, Kathleen A. Soled and Michael J.
Palumbo, and each of them, my true and lawful attorneys-in-fact, with full
power of substitution and resubstitution, for me and in my name, on my
behalf and in my stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Exchange Act of 1934, the Annual Report on
Form 10-K for TRANS WORLD AIRLINES, INC. for the fiscal year ended December
31, 1999, and to file such Annual Report on Form 10-K 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 and supplements to said
Annual Report on Form 10-K, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all
that each of said attorneys-in-fact, or his or her substitute or
substitutes, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of
February, 2000.
/s/ G. Joseph Reddington
------------------------
G. Joseph Reddington
<PAGE>
<PAGE>
POWER OF ATTORNEY
-----------------
KNOW ALL MEN BY THESE PRESENTS, that I, Blanche M. Touhill, a
Director of TRANS WORLD AIRLINES, INC., a Delaware corporation, do
constitute and appoint William F. Compton, Kathleen A. Soled and Michael J.
Palumbo, and each of them, my true and lawful attorneys-in-fact, with full
power of substitution and resubstitution, for me and in my name, on my
behalf and in my stead, in any and all capacities, to sign, pursuant to the
requirements of the Securities Exchange Act of 1934, the Annual Report on
Form 10-K for TRANS WORLD AIRLINES, INC. for the fiscal year ended December
31, 1999, and to file such Annual Report on Form 10-K 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 and supplements to said
Annual Report on Form 10-K, incorporating such changes as any of the said
attorneys-in-fact deems appropriate, hereby ratifying and confirming all
that each of said attorneys-in-fact, or his or her substitute or
substitutes, may do or cause to be done by virtue hereof.
IN WITNESS WHEREOF, I have hereunto set my hand this 18th day of
February, 2000.
/s/ Blanche M. Touhill
----------------------
Blanche M. Touhill
