<PAGE>
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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
-------------------------
FORM 10-Q
[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 2000
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 No.)
incorporation or organization)
ONE CITY CENTRE
515 N. SIXTH STREET
ST. LOUIS, MISSOURI 63101
(Address of principal executive offices, including zip code)
(314) 589-3000
(Registrant's telephone number, including area code)
=========================
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 (or for such shorter
period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.
Yes /X/ No / /
APPLICABLE ONLY TO REGISTRANTS INVOLVED IN BANKRUPTCY
PROCEEDINGS 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 / /
Indicate the number of shares outstanding of each of the issuer's
classes of common stock, as of the latest practicable date.
OUTSTANDING AS OF
CLASS OCTOBER 31, 2000
----------------------- -----------------
Common Stock, par value
$0.01 per share 71,896,504
========================================================================
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Part I. FINANCIAL INFORMATION
ITEM 1. FINANCIAL STATEMENTS
<TABLE>
TRANS WORLD AIRLINES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------- -------------------------
2000 1999 2000 1999
-------- -------- ---------- ----------
<S> <C> <C> <C> <C>
Operating revenues:
Passenger $881,918 $792,166 $2,479,541 $2,264,791
Freight and mail 24,399 23,030 73,999 72,354
All other 66,386 61,230 183,082 169,862
-------- -------- ---------- ----------
Total 972,703 876,426 2,736,622 2,507,007
-------- -------- ---------- ----------
Operating expenses:
Salaries, wages and benefits 336,424 327,300 998,436 944,209
Costs associated with contract ratification - 33,515 - 37,768
Aircraft fuel and oil 170,947 112,026 456,272 276,620
Passenger sales commissions 32,359 49,366 100,407 144,799
Aircraft maintenance materials and repairs 34,853 38,478 89,867 111,385
Depreciation and amortization 32,104 34,245 97,439 106,529
Aircraft rent 141,272 112,030 411,494 300,695
Other rent and landing fees 48,357 51,910 145,821 148,667
All other 187,360 176,485 536,479 514,480
-------- -------- ---------- ----------
Total 983,676 935,355 2,836,215 2,585,152
-------- -------- ---------- ----------
Operating loss (10,973) (58,929) (99,593) (78,145)
-------- -------- ---------- ----------
Other charges (credits):
Interest expense 20,410 22,399 67,121 71,810
Interest and investment income (3,252) (4,310) (8,392) (12,222)
Disposition of assets, gains and losses-net (1,041) (1,031) (3,885) 716
Other charges and credits-net (17,510) (21,741) (53,201) (58,408)
-------- -------- ---------- ----------
Total (1,393) (4,683) 1,643 1,896
-------- -------- ---------- ----------
Loss before income taxes, extraordinary items and
cumulative effect of accounting change (9,580) (54,246) (101,236) (80,041)
Provision (credit) for income taxes 25,203 (556) 1,051 550
-------- -------- ---------- ----------
Loss before extraordinary items and cumulative effect
of accounting change (34,783) (53,690) (102,287) (80,591)
Extraordinary items - - - (866)
Cumulative effect of accounting change - - (12,844) -
-------- -------- ---------- ----------
Net loss (34,783) (53,690) (115,131) (81,457)
Preferred stock dividend requirements 3,515 5,864 10,563 17,590
-------- -------- ---------- ----------
Loss applicable to common shares $(38,298) $(59,554) $ (125,694) $ (99,047)
======== ======== ========== ==========
Basic earnings per share amounts:
Loss before extraordinary items $ (0.49) $ (0.87) $ (1.50) $ (1.47)
Extraordinary items - - - (0.01)
Cumulative effect of accounting change - - (0.17) -
-------- -------- ---------- ----------
Net loss $ (0.49) $ (0.87) $ (1.67) $ (1.48)
======== ======== ========== ==========
See notes to consolidated financial statements
</TABLE>
1
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<PAGE>
<TABLE>
TRANS WORLD AIRLINES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
(AMOUNTS IN THOUSANDS)
ASSETS
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
(UNAUDITED)
<S> <C> <C>
Current assets:
Cash and cash equivalents $ 157,062 $ 180,443
Receivables, less allowance for doubtful accounts,
$14,476 in 2000 and $13,534 in 1999 245,732 155,070
Spare parts, materials and supplies, less allowance for
obsolescence, $17,613 in 2000 and $17,512 in 1999 106,333 101,179
Prepaid expenses and other 79,958 53,197
---------- ----------
Total 589,085 489,889
---------- ----------
Property:
Property owned:
Flight equipment 339,864 433,710
Prepayments on flight equipment 69,034 45,810
Land, buildings and improvements 79,277 77,021
Other property and equipment 90,383 90,115
---------- ----------
Total property owned 578,558 646,656
Less accumulated depreciation 179,033 161,153
---------- ----------
Property owned-net 399,525 485,503
---------- ----------
Property held under capital leases:
Flight equipment 176,094 176,094
Land, buildings and improvements 52,355 50,321
Other property held under capital leases 8,598 7,096
---------- ----------
Total property held under capital leases 237,047 233,511
Less accumulated amortization 147,944 127,845
---------- ----------
Property held under capital leases-net 89,103 105,666
---------- ----------
Total property-net 488,628 591,169
---------- ----------
Investments and other assets:
Investments in affiliated companies 90,276 82,901
Investments, receivables and other 139,692 133,973
Routes, gates and slots-net 170,427 181,983
Reorganization value in excess of amounts allocable to identifiable
assets-net 625,802 657,267
---------- ----------
Total 1,026,197 1,056,124
---------- ----------
$2,103,910 $2,137,182
========== ==========
See notes to consolidated financial statements
</TABLE>
2
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<PAGE>
<TABLE>
TRANS WORLD AIRLINES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
SEPTEMBER 30, 2000 AND DECEMBER 31, 1999
(AMOUNTS IN THOUSANDS EXCEPT PER SHARE AMOUNTS)
LIABILITIES AND SHAREHOLDERS' EQUITY
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
2000 1999
------------- ------------
(UNAUDITED)
<S> <C> <C>
Current liabilities:
Current maturities of long-term debt $ 175,164 $ 67,080
Current obligations under capital leases 39,814 38,664
Advance ticket sales 304,647 198,722
Accounts payable, principally trade 340,333 263,624
Accounts payable to affiliated companies 5,203 6,250
Accrued expenses:
Employee compensation and vacations earned 122,288 149,701
Contributions to retirement and pension trusts 22,918 15,165
Interest on debt and capital leases 13,466 14,235
Taxes 11,438 12,111
Other accrued expenses 199,375 195,340
----------- ----------
Total accrued expenses 369,485 386,552
----------- ----------
Total 1,234,646 960,892
----------- ----------
Long-term liabilities and deferred credits:
Long-term debt, less current maturities 416,495 600,909
Obligations under capital leases, less current obligations 98,055 127,143
Postretirement benefits other than pensions 509,334 502,097
Noncurrent pension liabilities 16,984 17,572
Other noncurrent liabilities and deferred credits 109,171 99,479
----------- ----------
Total 1,150,039 1,347,200
----------- ----------
Shareholders' equity:
8% cumulative convertible exchangeable preferred stock,
$50 liquidation preference; shares issued and outstanding:
2000-2,575; 1999-3,869 26 39
9 1/4% cumulative convertible exchangeable preferred stock,
$50 liquidation preference; shares issued and outstanding:
2000-818; 1999-1,725 8 17
Employee preferred stock, $0.01 liquidation preference;
special voting rights; shares issued and outstanding:
2000-6,105; 1999-6,712 61 67
Common stock, $0.01 par value; shares issued and outstanding:
2000-70,756; 1999-59,966 708 600
Additional paid-in capital 733,224 728,038
Accumulated deficit (1,014,802) (899,671)
----------- ----------
Total (280,775) (170,910)
----------- ----------
$ 2,103,910 $2,137,182
=========== ==========
See notes to consolidated financial statements
</TABLE>
3
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<TABLE>
TRANS WORLD AIRLINES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
------------------------
2000 1999
--------- --------
<S> <C> <C>
Cash flows from operating activities:
Net loss $(115,131) $(81,457)
Adjustments to reconcile net loss to net cash provided (used) by operating
activities:
Compensation paid in stock - 19,241
Depreciation and amortization 97,439 106,529
Amortization of discount and expense on debt 4,856 5,419
Amortization of deferred (gains) losses on sale and leaseback of certain
aircraft and engines (820) (2,655)
Extraordinary loss on extinguishment of debt - 866
Equity in undistributed earnings of affiliates not consolidated (29,217) (17,047)
Net (gains) losses on disposition of assets (3,885) 716
Change in operating assets and liabilities:
Decrease (increase) in:
Receivables (90,662) (72,787)
Inventories (6,106) (22)
Prepaid expenses and other current assets (26,736) (10,215)
Other assets (4,182) (7,920)
Increase (decrease) in:
Accounts payable and accrued expenses 53,357 59,364
Advance ticket sales 105,925 77,510
Other noncurrent liabilities and deferred credits 22,909 (7,690)
--------- --------
Net cash provided 7,747 69,852
--------- --------
Cash flows from investing activities:
Proceeds from sales of property 9,652 19,624
Capital expenditures, including aircraft pre-delivery deposits (39,569) (110,984)
Return of pre-delivery deposits related to leased aircraft - 23,712
Net (increase) decrease in investments, receivables and other 19,238 (1,425)
--------- --------
Net cash used (10,679) (69,073)
--------- --------
Cash flows from financing activities:
Proceeds from sale and leaseback of certain aircraft and engines 94,409 107,967
Repayments on long-term debt and capital lease obligations (114,858) (104,024)
Cash dividends paid on preferred stock - (17,590)
Net proceeds from exercise of warrants and options - 441
--------- --------
Net cash used (20,449) (13,206)
--------- --------
Net decrease in cash and cash equivalents (23,381) (12,427)
Cash and cash equivalents at beginning of period 180,443 252,408
--------- ---------
Cash and cash equivalents at end of period $ 157,062 $ 239,981
========= =========
See notes to consolidated financial statements
</TABLE>
4
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<PAGE>
<TABLE>
TRANS WORLD AIRLINES, INC. AND SUBSIDIARIES
STATEMENTS OF CONSOLIDATED CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(AMOUNTS IN THOUSANDS)
(UNAUDITED)
SUPPLEMENTAL CASH FLOW INFORMATION
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
----------------------
2000 1999
------- -------
<S> <C> <C>
Cash paid during the period for:
Interest $57,106 $62,905
======= =======
Income taxes $ 21 $ 16
======= =======
Information about noncash operating, investing and financing activities:
Promissory notes issued to finance aircraft acquisition $ 14 $ -
======= =======
Promissory notes issued to finance aircraft predelivery payments $23,798 $51,721
======= =======
Property acquired and obligations recorded under new capital lease
transactions $ 951 $ 245
======= =======
</TABLE>
ACCOUNTING POLICY
For purposes of the Statements of Consolidated Cash Flows, TWA
considers all highly liquid debt instruments purchased with a maturity
of three months or less to be cash equivalents.
See notes to consolidated financial statements
5
<PAGE>
<PAGE>
TRANS WORLD AIRLINES, INC. AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
(UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of
Trans World Airlines, Inc. ("TWA" or the "Company") and its
subsidiaries. The results of Worldspan, L.P. ("Worldspan"), a 26.315%
owned affiliate, are recorded under the equity method and are included
in the Statements of Consolidated Operations in Other Charges (Credits).
The unaudited consolidated financial statements included herein
have been prepared by the Company pursuant to the rules and regulations
of the Securities and Exchange Commission but do not include all
information and footnotes required by generally accepted accounting
principles pursuant to such rules and regulations. The consolidated
financial statements include all adjustments, which are of a normal
recurring nature and are necessary, in the opinion of management, for a
fair presentation of the results for these interim periods. These
consolidated financial statements and related notes should be read in
conjunction with the consolidated financial statements and related notes
contained in the Company's Annual Report on Form 10-K for the year ended
December 31, 1999. The consolidated balance sheet at December 31, 1999
has been derived from the audited consolidated financial statements at
that date. Certain amounts previously reported have been reclassified
to conform with the current presentation.
The consolidated financial results on an interim basis are not
necessarily indicative of future financial results on either an interim
or annual basis. TWA's air transportation business has historically
experienced seasonal changes with the second and third quarters of the
calendar year generally producing better operating results than the
first and fourth quarters, although operational adjustments with the
intent of reducing the level of seasonality have been, and continue to
be, implemented. Accordingly, the results for the three months and nine
months ended September 30, 2000 should not be read as indicators of
results for the full year.
2. INCOME TAXES
The tax provisions/benefits recorded in the third quarters of 2000
and 1999 reflect the reversal of previously recorded tax provisions/
benefits due to management's expectation of taxable losses for the full
years of 2000 and 1999, and the uncertainty of realization of the benefits
of any such tax losses in future periods.
3. LOSS PER SHARE
In computing the loss applicable to common shares for the three
months and nine months ended September 30, 2000, the net loss has been
increased by dividend requirements on the 8% Cumulative Convertible
Exchangeable Preferred Stock (the "8% Preferred Stock") and the 9 1/4%
Cumulative Convertible Exchangeable Preferred Stock (the "9 1/4% Preferred
Stock"). In computing the related net loss per share, the loss
applicable to common shares has been divided by the aggregate average
number of outstanding shares of common stock (72.7 million and 68.9
million for the three months and nine months ended September 30, 2000,
respectively) including 2.0 million shares to be issued to IAM-
represented employees as discussed in Note 8, and employee preferred
stock (6.1 million and 6.3 million for the three months and nine months
ended September 30, 2000, respectively) which, with the exception of
certain special voting rights, is the functional
6
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<PAGE>
equivalent of common stock. Diluted earnings per share are the same as
basic earnings per share for the periods presented as the impact of
stock options, warrants or potential issuances of additional common
stock or employee preferred stock in the three month and nine month
periods ended September 30, 2000 would have been anti-dilutive.
Cash dividends of $17.6 million on preferred stock were paid in the
first nine months of 1999, however, the Board of Directors determined
not to declare the payment of the dividend on either issue of preferred
stock during the first three quarters of 2000. As of September 30,
2000, cumulative unpaid preferred stock dividends aggregated $10.6
million.
The loss applicable to common shares for the three months and nine
months ended September 30, 1999 have likewise been adjusted by dividend
requirements on the 8% Preferred Stock and the 9 1/4% Preferred Stock. In
computing the related net loss per share, the loss applicable to common
shares has been divided by the aggregate average number of outstanding
shares of common stock (61.5 million and 59.5 million for the three
months and nine months ended September 30, 1999, respectively) including
3.0 million shares to be issued to IAM-represented employees as
discussed in Note 8, and employee preferred stock (7.0 million and 7.2
million for the three months and nine months ended September 30, 1999)
which, with the exception of certain special voting rights, is the
functional equivalent of common stock. Diluted earnings per share are
the same as basic earnings per share for the periods presented as the
impact of stock options, warrants or potential issuances of additional
common stock or employee preferred stock in the three month and nine
month periods ended September 30, 1999 would have been anti-dilutive.
4. PROPERTY AND DISPOSITION OF ASSETS
The Company has included in Investments, receivables and other the
net book value of its grounded L-1011 and B-747 aircraft as such
aircraft have been retired from service and are currently held for sale.
The carrying value of these aircraft at September 30, 2000 and 1999 was
$9.6 million and $19.7 million, respectively.
During the nine months ended September 30, 2000 and 1999,
disposition of assets resulted in net gains of $3.9 million and net
losses of $0.7 million, respectively. The net gains in the first nine
months of 2000 related primarily to the sale of 19 spare L-1011, B-767
and B-727 engines and five jetways. The 1999 net losses included a loss
from the sale and leaseback of B-767 aircraft, partially offset by gains
from the sale of L-1011 and B-727 aircraft and engines, spare L-1011 and
DC9-10 engines, L-1011 simulator and the sale of TWA's investment in
SATO Travel, a company which provides ticketing services ("SATO").
7
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<PAGE>
5. SEGMENT REPORTING
TWA operates one segment, that of air transportation. However,
that segment is analyzed and reported in two primary geographic areas,
Domestic (including Canada and the Caribbean) and International (the
Atlantic division as reported to the Department of Transportation).
Information related to revenues generated from operations within those
geographic areas is presented below.
<TABLE>
<CAPTION>
QUARTER ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
--------------------- -----------------------
2000 1999 2000 1999
------ ------ -------- --------
<S> <C> <C> <C> <C>
Operating Revenues (in millions):
Domestic $876.4 $767.1 $2,492.1 $2,224.3
International 96.3 109.3 244.5 282.7
------ ------ -------- --------
Total $972.7 $876.4 $2,736.6 $2,507.0
====== ====== ======== ========
</TABLE>
TWA identifies revenues to each division based on a proration
methodology of revenues generated to specific flight segments and the
division in which the flight segment operates. A major portion of the
Company's long-lived assets consists of its flight equipment (aircraft),
which are not assigned to a specific geographic area but rather are
flown across geographic boundaries.
6. SALE OF EQUANT SHARES
TWA is a long-term member of the Societe Internationale de
Telecommunications Aeronautiques ("SITA"), a worldwide provider of
communication services to the aviation industry. In February 1999,
members of SITA divested a portion of their shares in Equant N.V.
("Equant"), a telecommunication network company, through a secondary
offering. As a member of SITA, TWA indirectly participated in the
partial sale of its holdings in Equant in February 1999 and December
1999. In March 2000, TWA sold its remaining interest in Equant to a
third party, resulting in reported gains and receipts of cash of
approximately $21.3 million, $10.7 million and $16.7 million in the
first quarter of 1999, fourth quarter of 1999 and first quarter of 2000,
respectively. Such gains are included in Other charges and credits-net.
7. CONTINGENCIES
There has not been any significant change in the status of the
contingencies reflected in the notes to consolidated financial
statements included in the Company's Annual Report on Form 10-K for the
year ended December 31, 1999 which, among other matters, described
various contingencies and other legal actions against TWA, except as
discussed in Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations.
8
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<PAGE>
8. LABOR AGREEMENTS
As a result of contracts which became effective August 1, 1999 between
TWA and the International Association of Machinists and Aerospace
Workers ("IAM"), TWA agreed to pay increases over an 18 month period
that will result in wages for TWA's ground employees and flight
attendants improving by the end of the term of the contract to averages
ranging from 86.5% to 91.0% of industry average as determined by wage
rates in contracts in effect as of June 1999. Additionally, TWA 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 and 1,000,000 shares
were likewise distributed as of July 31, 2000. The remaining 2,000,000
shares will be distributed in a manner determined by the IAM to IAM-
represented employees as follows: as soon as practicable after January
31, 2001 - 1,000,000 shares and January 31, 2002 - 1,000,000 shares.
In conjunction with these contracts, TWA and the IAM-represented
employees agreed to withdraw all pending litigation including contempt
proceedings. Additionally, all outstanding grievances regarding scope,
work jurisdiction, outsourcing and compensation were withdrawn. IAM-
represented flight attendant employees agreed to a payment of $25.0
million in settlement of these disputed matters, to be distributed in a
manner directed by the IAM. On August 31, 1999, $11.0 million was
distributed and $11.0 million was distributed on August 17, 2000. The
remaining payment of $3.0 million will be distributed in August 2001.
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 no later than the following dates:
November 2, 2001 - $5.0 million, and August 1, 2002 - $5.0 million.
All unpaid amounts are reflected as liabilities in the
consolidated financial statements.
9. ACCOUNTING FOR SALES OF AVIATOR MILES
In December 1999, the Securities and Exchange Commission issued
Staff Accounting Bulletin ("SAB") No. 101, "Revenue Recognition in
Financial Statements," which provides guidance on the recognition,
presentation and disclosure of revenue in financial statements.
Although SAB 101 does not change existing accounting rules on revenue
recognition, certain changes in accounting to apply the guidance in SAB
101 may be accounted for as a change in accounting principle. Effective
January 1, 2000, the Company changed its method of accounting for the
sale of Aviator miles to business partners. Previously, TWA and most
other major airlines accounted for the proceeds received from the sale
of affinity miles as revenue during the month of sale, net of the
estimated incremental cost of providing future air travel. Under the
new accounting method, that portion of the revenue from the sale of
miles which is estimated to reflect the fair value of future
transportation to be provided will be deferred and recognized in income
when the transportation is provided. The remaining portion of the sale
proceeds will continue to be recognized at the time of sale as other
revenue. The Company believes the new method results in better matching
of revenue with the period in which travel services are provided. The
cumulative effect of this change resulted in a charge to earnings of
$12.8 million in the first quarter of 2000. Prior period financial
statements have not been restated. If the newly adopted policy had been
applied in the prior year, the impact on net income would have been
immaterial.
9
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<PAGE>
ITEM 2. 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. The words "believe,"
"expect," "intend," "estimate," "anticipate," "will," and similar
expressions identify 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.
The following are some of the factors and uncertainties that may
adversely affect future results of operations:
* 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 provide
service to 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; and
* the adverse effects on yield of the continued implementation
of the discount ticket agreement between TWA and Karabu
Corp.
TWA is unable to predict the potential effect of any of these
uncertainties and the other uncertainties discussed herein upon its
future results of operations.
GENERAL
TWA operates in a highly competitive, capital-intensive industry.
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 will further intensify the competitive environment in which
TWA operates.
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
10
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<PAGE>
that previously were served only by through-hub service. Although TWA
has signed agreements with three companies which operate regional jets,
TWA's current labor agreements limit the total number of regional jets
that TWA may utilize. TWA began offering regional jet service in the
first quarter of 2000.
These issues represent a competitive challenge for the Company,
which has higher operating costs than many others carriers and fewer
financial resources than many of its major competitors. Small
fluctuations in revenue per available seat mile ("RASM") and cost per
available seat mile ("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, 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.
TWA is unable to predict whether and to what extent these
initiatives will be successful.
Labor Costs
Wage rates for most of TWA's employees have increased recently as
a result of several events. The current collective bargaining agreement
between TWA and its pilots became effective September 1, 1998 and is
amendable October 1, 2002. As part of the 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 at TWA's option, in four equal quarterly
payments commencing in 1999. The Company made a quarterly distribution
of 250,000 shares of common stock in each of April, August and November
1999 and February 2000.
TWA's current agreement with the IAM for TWA flight attendant and
ground employees became effective August 1, 1999 and becomes amendable
on January 31, 2001. TWA agreed to salary increases over the term of
the agreement that will result in wages for TWA's ground employees and
flight attendants improving by the end of the term of the contract to
averages ranging from 86.5% to 91.0% of industry average as determined
by wage rates in contracts in effect as of June 1999. Additionally, TWA
agreed to distribute 3,500,000 shares of
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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 and 1,000,000 shares were likewise distributed as
of July 31, 2000. The remaining 2,000,000 shares will be distributed in
a manner determined by the IAM to IAM-represented employees as follows:
as soon as practicable after January 31, 2001 - 1,000,000 shares and
January 31, 2002 - 1,000,000 shares.
In conjunction with these contracts, TWA and the IAM-represented
employees 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 and $11.0 million was distributed on August 17,
2000. The remaining payment of $3.0 million will occur in August 2001.
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.
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. The third and final installment of $9.1 million was paid
on September 8, 2000.
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 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. The ESIP requires TWA, from 1997 through 2002,
to make grants on July 15 of each year if the average market closing
price of the common stock for 30 consecutive trading days has exceeded a
target price for such year. Each annual grant is cumulative. The first
two target prices were realized in 1998. If the ESIP's remaining target
prices (ranging from $13.10 to $17.72) for TWA common stock are
realized, the minimum aggregate non-cash charge for the years 1999 to
2002 will be approximately $104.8 million based upon these target prices
and the number of shares of common stock and employee preferred stock
outstanding at December 31, 1999. The non-cash charge for any year,
however, could be substantially higher if the then market price of TWA
common stock exceeds the target prices.
TWA believes it is essential to improve employee productivity as
an offset to any wage increases and will continue to explore other ways
to control and/or reduce operating expenses. While TWA experienced wage
rate increases in 1999, it also generated 3.3% more available seat miles
("ASMs") with 4.2% fewer employees in 1999. This trend continued in the
first nine months of 2000 when the Company generated 7.1% more ASMs with
2.5% fewer employees than the comparable period in 1999. On a unit cost
basis (salaries, wages and benefits per ASM excluding costs associated
with contract ratification), there was no increase from 1999 to 2000
reflecting an
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overall productivity improvement in this category. However, there can
be no assurance that the Company will be successful in sustaining such
productivity improvements or achieving unit cost reductions. It is
essential that the Company's labor costs remain favorable in comparison
to its competitors.
TWA's passenger traffic data, for scheduled passengers only, is shown in
the table below for the indicated periods(1):
913:
<TABLE>
<CAPTION>
THREE MONTHS
ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30, YEARS ENDED DECEMBER 31,
------------------- --------------------- ------------------------------------
2000 1999 2000 1999 1999 1998 1997
------ ------ ------- ------- ------- ------- --------
<S> <C> <C> <C> <C> <C> <C> <C>
NORTH AMERICA
Passenger revenues ($ millions) $ 800 $ 701 $ 2,276 $ 2,033 $ 2,690 $ 2,579 $ 2,526
Revenue passenger miles
(millions)(2) 6,695 6,036 18,355 16,776 22,129 20,132 19,737
Available seat miles
(millions)(3) 8,690 7,960 25,163 22,696 30,517 28,796 29,341
Passenger load factor(4) 77.0% 75.8% 72.9% 73.9% 72.5% 69.9% 67.3%
Passenger yield (cents)(5) 11.95 cents 11.62 cents 12.40 cents 12.12 cents 12.15 cents 12.81 cents 12.80 cents
Passenger revenue per available
seat mile (cents)(6) 9.21 cents 8.81 cents 9.04 cents 8.96 cents 8.81 cents 8.96 cents 8.61 cents
INTERNATIONAL
Passenger revenues ($ millions) $ 82 $ 91 $ 204 $ 232 $ 294 $ 333 $ 412
Revenue passenger miles
(millions)(2) 945 1,113 2,501 3,009 3,881 4,290 5,363
Available seat miles
(millions)(3) 1,175 1,433 3,279 3,865 5,071 5,657 7,093
Passenger load factor(4) 80.5% 77.7% 76.3% 77.9% 76.5% 75.8% 75.6%
Passenger yield (cents)(5) 8.65 cents 8.17 cents 8.15 cents 7.69 cents 7.58 cents 7.78 cents 7.68 cents
Passenger revenue per available
seat mile (cents)(6) 6.96 cents 6.35 cents 6.22 cents 5.99 cents 5.80 cents 5.90 cents 5.81 cents
TOTAL SYSTEM
Passenger revenues ($ millions) $ 882 $ 792 $ 2,480 $ 2,265 $ 2,984 $ 2,912 $ 2,938
Revenue passenger miles
(millions)(2) 7,640 7,149 20,856 19,785 26,010 24,422 25,100
Available seat miles
(millions)(3) 9,865 9,393 28,442 26,561 35,588 34,453 36,434
Passenger load factor(4) 77.5% 76.1% 73.3% 74.5% 73.1% 70.9% 68.9%
Passenger yield (cents)(5) 11.54 cents 11.08 cents 11.89 cents 11.45 cents 11.47 cents 11.93 cents 11.70 cents
Passenger revenue per available
seat mile (cents)(6) 8.94 cents 8.43 cents 8.72 cents 8.53 cents 8.38 cents 8.45 cents 8.06 cents
Operating cost per available
seat mile (cents)(7) 9.72 cents 9.41 cents 9.75 cents 9.42 cents 9.50 cents 9.31 cents 8.99 cents
Operating cost per available
seat mile excluding fuel
(cents)(7) 7.98 cents 8.22 cents 8.15 cents 8.39 cents 8.40 cents 8.25 cents 7.66 cents
Average daily utilization per
aircraft (hours)(8) 9.83 9.82 9.82 9.77 9.67 9.77 9.38
Aircraft in fleet being operated
at end of period 189 191 189 191 183 185 185
<FN>
------
(1) Excludes subsidiary companies. Certain revenue and unit revenue
information previously reported has been reclassified to conform
with the current presentation.
(2) The number of scheduled miles flown by revenue passengers.
(3) The number of seats available for passengers multiplied by the
number of scheduled miles those seats are flown.
(4) Revenue passenger miles divided by available seat miles.
(5) Passenger revenue per revenue passenger mile.
(6) Passenger revenue divided by scheduled available seat miles.
(7) Operating expenses, excluding special charges, other nonrecurring
charges, subsidiaries and regional jet operations, divided by
total available seat miles.
(8) The average block hours flown per day in revenue service per
aircraft.
</TABLE>
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RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2000
COMPARED TO THE THREE MONTHS ENDED SEPTEMBER 30, 1999
During the third quarter of 2000, TWA reported an operating loss
of $11.0 million compared to a third quarter 1999 operating loss of
$58.9 million, a favorable change of $47.9 million. The 1999 operating
loss included a non-recurring charge of $33.5 million related to the
ratification on July 22, 1999 of the labor agreements for employees
represented by the IAM. The Company reported a third quarter 2000 pre-
tax loss of $9.6 million, which was a decrease of $44.6 million from the
1999 pre-tax loss of $54.2 million. The net loss of $34.8 million in
the third quarter of 2000, which included a non-operating pre-tax gain
of $10.4 million from TWA's share of a favorable litigation judgment
awarded to Worldspan, represented an $18.9 million decrease from the net
loss of $53.7 million in the third quarter of 1999, which included a
$16.0 million non-operating pre-tax gain from the sale of TWA's warrants
in Priceline.com.
Total operating revenues were $972.7 million in the third quarter
of 2000, a $96.3 million increase from operating revenues of $876.4
million for the comparable period of 1999. Passenger revenue for the
third quarter of $881.9 million improved $89.7 million over passenger
revenue of $792.2 million in the third quarter of 1999 largely due to
more efficient utilization of its revitalized fleet and changes in its
route structure. In the first quarter of 2000, the Company introduced
the first regional jets into its route structure through code-sharing
agreements that contributed to both the increase in passenger revenue
and the $5.2 million increase in all other revenues in the third quarter
2000.
System-wide capacity, as measured by scheduled ASMs, increased
5.0% in the third quarter of 2000 over the comparable period of 1999.
Domestic ASMs increased 9.2% while international ASMs decreased 18.0%.
Revenue passenger miles (RPMs) in scheduled service for the quarter were
7,640.4 million compared with 7,148.5 million RPMs in the third quarter
of 1999 representing a 6.9% increase. The system passenger load factor
increased 1.4 percentage points in the third quarter of 2000 versus the
same period in 1999 to 77.5% from 76.1% resulting from a greater
increase in RPMs than ASMs. System yield increased 4.2% to 11.54 cents
in the third quarter of 2000 compared to 11.08 cents in 1999 reflecting
higher overall industry fare levels and improvements in TWA's domestic
front cabin yield partly in response to increased marketing efforts in
support of TWA's special FirstUp fare. RASM increased year over year to
8.94 cents in the third quarter of 2000 from 8.43 cents in the third
quarter of 1999. Since September 1999, TWA has taken delivery of 27 new
aircraft of which 14 aircraft were delivered in 1999 and 13 aircraft
were delivered in the first nine months of 2000. CASM increased 3.3% to
9.72 cents from 9.41 cents for the third quarter of 1999. The CASM
increase was heavily impacted by increased fuel costs and the increase
in aircraft rental expense resulting from the replacement of older
aircraft with new more modern equipment.
Operating expenses increased $48.4 million during the third
quarter of 2000 to $983.7 million from $935.3 million during the third
quarter of 1999, representing a net change in the following expense
groups:
* Salaries, wages and benefits were $336.4 million during the
third quarter of 2000 compared to $327.3 million during the
third quarter of 1999, an increase of $9.1 million. The
average number of full-time equivalent employees decreased
2.6% to 20,432 in the third quarter of 2000 versus 20,982 in
the third quarter of 1999. This headcount reduction was
more than offset by August 1, 1999 and 2000 salary increases
to IAM-represented employees, September 1, 1999 and 2000
increases in pilot salary as provided in their current
contract, and a 3% salary increase granted to non-contract
employees 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%.
Additionally, TWA's third quarter 2000 costs for its trust
plans contributed $5.4 million to the overall increase due
to the new IAM Pension Fund effective January 2000.
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<PAGE>
* Costs associated with contract ratification were $33.5
million during the third quarter of 1999 which represented
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 included
$35.0 million in litigation settlement costs, $16.0 million
for common stock to be issued to IAM-represented employees,
and $1.4 million for union advisory costs reimbursed by the
Company, net of amounts previously accrued. The contracts
became effective August 1, 1999. There were no similar
charges in the third quarter 2000.
* Aircraft fuel and oil expense of $170.9 million for the
third quarter of 2000 was $58.9 million greater than $112.0
million recorded in the third quarter of 1999 due to an
increase in the average cost per gallon to 97.0 cents in
2000 from 62.6 cents in 1999.
* Passenger sales commission expense of $32.4 million in the
third quarter of 2000 was $17.0 million less than the
expense recorded in the third quarter of 1999 primarily due
to a 13% decrease in the percentage of commissionable
tickets sold and an overall 34% reduction in commission
rates. The standard commission rates generally decreased in
2000 to 5% from 8% in 1999 while standard commission rates
increased in certain selected markets in order to meet
competition.
* Aircraft maintenance material and repairs expense of $34.9
million for the third quarter of 2000 represents a decrease
of $3.6 million from $38.5 million during the same period of
1999. The primary factor contributing to this decrease was
a reduction in engine material requirements and the effect
of adding new, lower maintenance B-757, B-767, B-717 and MD-
80 aircraft to the fleet.
* Depreciation and amortization expense decreased $2.1 million
to $32.1 million in the third quarter of 2000 from $34.2
million in the third quarter of 1999. The decrease resulted
primarily from the write-off of the carrying value of
international routes in the fourth quarter of 1999 and a
reduction in expense for ground equipment.
* Aircraft lease rentals increased $29.3 million to $141.3
million in the third quarter of 2000 from $112.0 million in
the third quarter of 1999. This increase includes rentals
on 41 new aircraft delivered during and since the third
quarter 1999, in addition to the sale and leaseback of B-767
and B-757 aircraft as part of TWA's aggressive fleet renewal
plan.
* Other rent and landing fees were $48.3 million in the third
quarter of 2000 versus $51.9 million in the third quarter of
1999, a decrease of $3.6 million. The decrease resulted
primarily from the closure of terminal six at JFK in
December 1999 and reduced space rental at LAX.
* All other operating expenses of $187.4 million in the third
quarter of 2000 were $10.9 million more than the $176.5
million recorded in the third quarter of 1999, primarily
represented by increases in computerized reservation system
fees ($5.4 million) and expenses related to the Trans World
Express regional jet code-sharing agreements ($13.3
million), partially offset by a reduction in consulting fees
($3.3 million).
Other charges (credits) were a net credit of $1.4 million during
the third quarter of 2000 compared to a net credit of $4.7 million for
the third quarter of 1999. Interest expense decreased $2.0 million in
the third quarter of 2000 from the same period in 1999 as a result of
the retirement of certain debt in 1999 and 2000. Interest and
investment income decreased $1.0 million in the third quarter of 2000
primarily due to a decrease in the level of invested funds. Net gains
from the disposition of assets were approximately the same during
the third quarters of 2000 and 1999, respectively. Other charges and
credits - net decreased $4.3 million in the third
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<PAGE>
quarter of 2000 compared to the third quarter of 1999 primarily due to
the 1999 gain of $16.0 million from the sale of warrants to purchase
312,500 shares of Priceline.com stock with no comparable transaction in
2000. Also contributing to this net change was an increase of $10.6
million in TWA's share of estimated earnings in Worldspan in the third
quarter of 2000, which included $10.4 million from a favorable
litigation judgment awarded to Worldspan, as compared to the earnings
recorded in the comparable period of 1999.
A tax provision of $25.2 million was recorded in the third quarter
of 2000 compared to a tax benefit of $0.5 million in the third quarter
of 1999 (see Note 2 to Consolidated Financial Statements).
The Company had a net loss of $34.8 million in the third quarter
of 2000 compared to a net loss of $53.7 million in the same period of
1999.
RESULTS OF OPERATIONS FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
COMPARED TO THE NINE MONTHS ENDED SEPTEMBER 30, 1999
For the first nine months of 2000, TWA reported an operating loss
of $99.6 million compared to a prior year operating loss of $78.2
million, an unfavorable change of $21.4 million. The 1999 operating
loss included a non-recurring charge of $37.8 million related to the
ratification on July 22, 1999 of the labor agreements for employees
represented by the IAM. The Company reported a pre-tax loss of $101.2
million in the first nine months of 2000, which included non-operating
gains of $10.4 million from TWA's share of a favorable litigation
judgment awarded to Worldspan and $16.7 million from sale of TWA's
remaining holdings in Equant. This pre-tax loss represented an increase
of $21.1 million over the 1999 pre-tax loss of $80.1 million, which
included gains from the sales of the Company's interests in Equant and
Priceline.com aggregating $37.3 million. The net loss of $115.1 million
in the first nine months of 2000 represented a $33.6 million increase
over the net loss of $81.5 million for the comparable period of 1999.
The net loss for the first nine months of 2000 included a charge of
$12.8 million for the cumulative effect of accounting change related to
a change in method of accounting for the sale of Aviator miles to
business partners in the Company's frequent flyer program.
Total operating revenues were $2,736.6 million in the first nine
months of 2000, a $229.6 million increase over operating revenues of
$2,507.0 million for the comparable period of 1999. Passenger revenue
for the first nine months of $2,479.5 million improved $214.7 million
over passenger revenue of $2,264.8 million from the prior year period
largely due to more efficient utilization of its revitalized fleet and
changes in its route structure. In the first quarter of 2000, the
Company introduced the first regional jets into its route structure
through code-sharing agreements that contributed to both the increase in
passenger revenue and the $13.3 million increase in all other revenues.
System-wide capacity, as measured by scheduled ASMs, increased
7.1% in the first nine months of 2000 over the comparable period of
1999. Domestic ASMs increased 10.9% while international ASMs decreased
15.2%. Revenue passenger miles (RPMs) in scheduled service for the
quarter were 20,855.5 million compared with 19,785.1 million RPMs in the
first nine months of 1999 representing a 5.4% increase. The system
passenger load factor decreased 1.2 percentage points in the first nine
months of 2000 versus the same period in 1999 to 73.3% from 74.5%
resulting from a greater increase in ASMs than RPMs. System yield
increased 3.8% to 11.89 cents in the first nine months of 2000 compared
to 11.45 cents in 1999 reflecting higher overall industry fare levels
and improvements in TWA's domestic front cabin yield partly in response
to increased marketing efforts in support of TWA's special FirstUp fare.
RASM increased year over year to 8.72 cents in the first nine months of
2000 from 8.53 cents in the first nine months of 1999. Since September
1999, TWA has taken delivery of 27 new aircraft of which 14 aircraft
were delivered in 1999 and 13 aircraft were delivered in the first nine
months of 2000. Operating expenses per available seat mile (CASM)
increased 3.5% to 9.75 cents from 9.42 cents for the
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first nine months of 1999. The CASM increase was heavily impacted by
increased fuel costs and the increase in aircraft rental expense
resulting from the replacement of older aircraft with new, modern
equipment.
Operating expenses increased $251.0 million during the first nine
months of 2000 to $2,836.2 million from $2,585.2 million during the
first nine months of 1999, representing a net change in the following
expense groups:
* Salaries, wages and benefits were $998.4 million during the
first nine months of 2000 compared to $944.2 million during
the first nine months of 1999, an increase of $54.2 million.
The average number of full-time equivalent employees
decreased 2.5% to 20,537 in the first nine months of 2000
versus 21,068 in the first nine months of 1999. This
headcount reduction was more than offset by August 1, 1999
and 2000 salary increases to IAM-represented employees,
September 1, 1999 and 2000 increases in pilot salary as
provided in their current contract, and a 3% salary increase
granted to non-contract employees 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%. Additionally, TWA's first nine
months of 2000 costs for its trust plans contributed $20.2
million to the overall increase when compared to the first
nine months of 1999 primarily due to the new IAM Pension
Fund effective January 2000.
* Costs associated with contract ratification were $37.8
million during the nine months ended September 30, 1999
which represented 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 included $35.0 million in litigation settlement costs,
$16.0 million for common stock to be issued to IAM-
represented employees, and $1.4 million for union advisory
costs reimbursed by the Company, net of amounts previously
accrued. The contracts became effective August 1, 1999.
There were no similar charges in the nine months ended
September 30, 2000.
* Aircraft fuel and oil expense of $456.3 million for the
first nine months of 2000 was $179.7 million greater than
$276.6 million recorded in the first nine months of 1999 due
to an increase in the average cost per gallon to 90.0 cents
in 2000 from 53.8 cents in 1999.
* Passenger sales commission expense of $100.4 million in the
first nine months of 2000 was $44.4 million less than the
expense recorded in the first nine months of 1999 primarily
due to a 12% decrease in the percentage of commissionable
tickets sold and an overall 33% reduction in commission
rates. The standard commission rates generally decreased in
2000 to 5% from 8% in 1999 while standard commission rates
increased in certain selected markets in order to meet
competition.
* Aircraft maintenance material and repairs expense of $89.9
million for the first nine months of 2000 represents a
decrease of $21.5 million from $111.4 million during the
same period of 1999. The primary factor contributing to
this decrease was a reduction in engine material
requirements and the effect of adding new lower maintenance
B-757, B-767, B-717 and MD-80 aircraft to the fleet.
* Depreciation and amortization expense decreased $9.1 million
to $97.4 million in the first nine months of 2000 from
$106.5 million in the first nine months of 1999. The
decrease resulted primarily from the sale and leaseback of
five B-767 aircraft and the write-off of the carrying value
of international routes in the fourth quarter of 1999.
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* Aircraft lease rentals increased $110.8 million to $411.5
million in the first nine months of 2000 from $300.7 million
in the first nine months of 1999. This increase includes
rentals on 52 new aircraft delivered during and since the
first nine months of 1999, in addition to the sale and
leaseback of B-767 and B-757 aircraft as part of TWA's
aggressive fleet renewal plan.
* Other rent and landing fees were $145.8 million in the first
nine months of 2000 versus $148.7 million in the first nine
months of 1999, a decrease of $2.9 million. The decrease
resulted primarily from the closure of terminal six at JFK
in December 1999, partially offset by an increase in space
rentals at certain airports during 2000 compared to the
first nine months of 1999.
* All other operating expenses of $536.5 million in the first
nine months of 2000 were $22.0 million more than the $514.5
million recorded in the first nine months of 1999, primarily
represented by increases in computerized reservation system
fees and expenses related to the Trans World Express
regional jet code-sharing agreement, partially offset by a
reduction in consulting fees.
Other charges (credits) were a net charge of $1.6 million during
the first nine months of 2000 compared to a net charge of $1.9 million
for the first nine months of 1999. Interest expense decreased $4.7
million in the first nine months of 2000 from the same period in 1999 as
a result of the retirement of certain debt in 1999 and 2000. Interest
and investment income decreased $3.8 million in the first nine months of
2000 primarily due to a decrease in the level of invested funds. Net
gains from the disposition of assets were $3.9 million during the first
nine months of 2000 compared to a loss of $0.7 million in 1999. The net
gains in the first nine months of 2000 included the sale of 19 spare L-
1011, B-767 and B-727 engines and five jetways. The net losses in 1999
included a loss from the sale and leaseback of B-767 aircraft, partially
offset by gains from the sale of L-1011 and B-727 aircraft and engines,
spare L-1011 and DC9-10 engines, L-1011 simulator and the sale of TWA's
investment in SATO. Other charges and credits - net showed an
unfavorable decline of $5.2 million in the first nine months of 2000
compared to the first nine months of 1999 due to the following factors:
(i) a 1999 gain of $16.0 million from the sale of warrants to purchase
312,500 shares of Priceline.com stock with no comparable transaction in
2000; (ii) the 2000 gain from the sale of TWA's remaining holdings in
Equant ($16.7 million) which was less than a similar gain recorded in
the comparable period of 1999 ($21.3 million); and (iii) an increase of
$12.2 million in TWA's share of estimated earnings in Worldspan, which
included $10.4 million from a favorable litigation judgment awarded to
Worldspan, as compared to the earnings recorded in the comparable period
of 1999.
A tax provision of $1.1 million was recorded in the first nine
months of 2000 compared to a provision of $0.5 million in the first nine
months of 1999 (see Note 2 to Consolidated Financial Statements).
In December 1999, the Securities and Exchange Commission issued
SAB No. 101, "Revenue Recognition in Financial Statements" which
provides guidance on the recognition, presentation and disclosure of
revenue in financial statements. Although SAB 101 does not change
existing accounting rules on revenue recognition, certain changes in
accounting to apply the guidance in SAB 101 may be accounted for as a
change in accounting principle. Effective January 1, 2000, the Company
changed its method of accounting for the sale of Aviator miles to
business partners. Previously, TWA and most other major airlines
accounted for the proceeds received from the sale of affinity miles as
revenue during the month of sale, net of the estimated incremental cost
of providing future air travel. Under the new accounting method, that
portion of the revenue from the sale of miles which is estimated to
reflect the fair value of future transportation to be provided will be
deferred and recognized in income when the transportation is provided.
The remaining portion of the sale proceeds will continue to be
recognized at the time of sale as other revenue. The Company believes
the new method results in better matching of revenue with the period in
which travel services are provided. The cumulative effect of this
change resulted in a charge to earnings of $12.8 million in the first
quarter of 2000. Prior period financial
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<PAGE>
statements have not been restated. If the newly adopted policy had been
applied in the prior year, the impact on net income would have been
immaterial.
The Company had a net loss of $115.1 million in the first nine
months of 2000 compared to a net loss of $81.5 million in the same
period of 1999. The 1999 results include an extraordinary charge of
$0.9 million related to the premium on the early retirement of 11 3/8%
Notes and 10 1/4% Notes which were redeemed to comply with the
requirements of the indentures for such notes in order to permit TWA to
sell a portion of the collateral securing the 11 3/8% Notes and all of
the collateral securing the 10 1/4% Notes.
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 and
many of these comments also are forward-looking statements within the
meaning of Section 21E of the Exchange Act (see the first paragraph of
this Item 2).
Liquidity
The Company's consolidated cash and cash equivalents balance at
September 30, 2000 was $157.1 million, a $23.3 million decrease from the
December 31, 1999 balance of $180.4 million. Operating activities
provided $7.7 million in cash in the first nine months of 2000 versus
cash provided of $69.9 million in 1999. The decrease in cash provided
from operations resulted from an increased net loss of $33.7 million in
the first nine months of 2000 as compared to the same period in 1999. In
2000, TWA's share of the estimated earnings in Worldspan, included $10.4
million from a favorable litigation judgment awarded to Worldspan, as
compared to the earnings recorded in the comparable period of 1999.
Both 1999 and 2000, however, include gains from the sale of shares in
Equant, $21.3 million and $16.7 million, respectively. Finally, a 1999
gain of $16.0 million from the sale of warrants to purchase 312,500
shares of Priceline.com stock had no comparable transaction in 2000.
Cash used by investing activities decreased to $10.7 million in
the first nine months of 2000 versus $69.1 million in the first nine
months of 1999. Capital expenditures (including aircraft predelivery
deposits) during the first nine months of 2000 amounted to $39.6
million. This compared to $83.9 million during the first nine months of
1999 after excluding cash used to purchase one B-767-200 aircraft and
related engines for $27.1 million. Asset sales during both periods were
primarily limited to retired, widebody aircraft, engines and other
surplus equipment. Additionally, approximately $23.7 million was
provided in 1999 primarily due to the return of predelivery deposits
relating to two new B-757-200 aircraft delivered in March and May 1999,
which were immediately sold to and leased back under operating leases
from an aircraft lessor.
Cash used by financing activities was $20.4 million in the first
nine months of 2000 versus $13.2 million in the same period of 1999.
Proceeds from the sale and leaseback of certain aircraft were $94.4
million in the first nine months of 2000 relating to the sale and
leaseback of two B-757 aircraft versus $108.0 million in the comparable
period in 1999 primarily relating to the sale and leaseback of five
B-767-200 and one B-757 aircraft. Repayments of long-term debt and
capital lease obligations were $114.8 million in the first nine months
of 2000, including $72.6 million of debt associated with the sale and
leaseback of two B-757 aircraft, compared to $104.0 million in the first
nine months of 1999, including $57.6 million of debt associated with the
sale and leaseback of five B-767-200 aircraft. Cash dividends of $17.6
million on preferred stock were paid in the first nine months of
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1999, however, the Board of Directors determined not to declare the
payment of the dividend on either issue of preferred stock during the
first three quarters of 2000.
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 increased substantially in 2000. The Company has not hedged the
costs of any of its future fuel requirements and, accordingly, until
such prices abate or unless the fuel surcharges previously imposed by
the Company are sufficient to cover such higher costs, such additional
costs will continue to adversely affect its operating results. 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.
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. The Company is
currently considering various alternatives to monetize this asset.
Should the Company require additional liquidity and be unable
to monetize its holdings in Worldspan 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.
Commitments
TWA finalized the terms of the purchase orders for 50 B-717-200
aircraft in June of 1999 and the terms of options for an additional 50
B-717-200 aircraft. Financing agreements on these B-717-200 aircraft
were also finalized in June of 1999. The first B-717-200 aircraft was
delivered in February 2000 and eight additional
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aircraft were delivered by September 2000. During the fourth quarter of
2000, TWA expects to take delivery of six additional aircraft of which
two of these aircraft were delivered in October 2000.
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. 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.
Deliveries of the 38 aircraft are scheduled to commence in 2004.
Financing agreements on 25 of these A318 aircraft were also finalized in
December of 1999. Should Airbus fail to provide or arrange for
financing for any of the remaining 13 A318 aircraft, TWA would have the
right to terminate the purchase order for those aircraft. In June,
2000, TWA finalized the terms of purchase orders for 25 A319 aircraft in
addition to the A318 aircraft and "A320 aircraft" options described
above. Predelivery payments totaling $4.0 million have been made by TWA
and approximately $3.0 million will be due in June 2001. Financing
agreements on 16 of these A319 aircraft were also finalized in June
2000. Five of the A319 aircraft are subject to cancellation by TWA.
Should Airbus fail to provide or arrange for financing for any of
the remaining four aircraft, TWA would have the right to terminate the
purchase order for those aircraft. These aircraft will primarily
replace DC-9 and MD-80 aircraft currently in TWA's fleet.
Both the B-717 and the Airbus 318 and A319 financing commitments
are subject to a "material adverse change" clause. Those provisions are
comparable to those contained in prior agreements for the acquisition of
B-757 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 April 1999, TWA sold and leased back four B-767-200 aircraft
and completed a sale/leaseback in July 1999 of a fifth such aircraft.
In connection with this transaction, the Company purchased $28.8 million
total principal amount of its outstanding 11 3/8% Notes and all of its
outstanding 10 1/4% Senior Secured Notes due June 15, 2003 which totaled
$14.5 million. These five B-767-200 aircraft were replaced with three
B-767-300 aircraft from the same aircraft lessor. As of September 30,
2000, four B-767-200 aircraft had been returned and the fifth aircraft
will be returned during the fourth quarter of 2000.
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. Management's
initial estimates of the 1998 restructuring costs were reduced by $6.8
million due to international regulatory involvement which precluded the
Company from carrying out its original restructuring plan. The Company
continues to expect
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severance costs of $4.4 million to be paid to the affected respective
employees during the remainder of 2000 due to these changes in
operations.
During 1999, 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 for approximately 200
operational, management and administrative employees. The Company has
concluded settlement of expected severance costs for the restructuring
in Spain and Rome, Italy. The Company continues to expect the $5.9
million remaining route closure costs will be paid during the remainder
of 2000 and into the first quarter of 2001.
The 1998 special charges include:
<TABLE>
<CAPTION>
ACCRUAL AT PAID THROUGH ACCRUAL AT
DECEMBER 31, 1999 SEPTEMBER 30, 2000 SEPTEMBER 30, 2000
----------------- ------------------ ------------------
<S> <C> <C> <C>
Severance $6.6 $2.2 $4.4
==== ==== ====
</TABLE>
The 1999 special charges include:
<TABLE>
<CAPTION>
ACCRUAL AT PAID THROUGH ACCRUAL AT
DECEMBER 31, 1999 SEPTEMBER 30, 2000 SEPTEMBER 30, 2000
----------------- ------------------ ------------------
<S> <C> <C> <C>
Severance $11.4 $6.4 $5.0
Other costs 0.9 - 0.9
----- ---- ----
$12.3 $6.4 $5.9
===== ==== ====
</TABLE>
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
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.
22
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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.
ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
The risk inherent in the Company's market risk sensitive
instruments and positions is the potential loss arising from adverse
changes in those factors. TWA is susceptible to certain risks related
to changes in the cost of jet fuel, changes in interest rates and
foreign currency exchange rate fluctuations. The Company does not
purchase or hold any derivative financial instruments for trading
purposes.
Aircraft Fuel
Airline operators are inherently dependent upon energy to operate
and, therefore, are impacted by changes in jet fuel prices. Jet fuel
and oil consumed in the first nine months of 2000 represented
approximately 16.1% of TWA's operating expenses. TWA endeavors to
acquire jet fuel at the lowest prevailing prices possible.
TWA's earnings are affected by changes in the price and
availability of aircraft fuel. The Company hedges its exposure to jet
fuel price market risk only on a limited basis. The fair value of
outstanding derivative commodity instruments (primarily commodity swap
agreements) related to the Company's jet fuel price market risk during
the first nine months of 2000 and at September 30, 1999 was immaterial.
A one cent change in the average cost of jet fuel would impact TWA's
aircraft fuel expense by approximately $6.8 million per year, based upon
consumption during the first nine months of 2000.
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<PAGE>
Interest Rates
Airline operators are also inherently capital intensive, as the
vast majority of assets are aircraft, which are long lived. TWA's
exposure to market risk associated with changes in interest rates
relates primarily to its debt obligations. The Company does not have
significant exposure to changes in cash flows resulting from changes in
interest rates as substantially all its long-term debt carries fixed
rates of interest. The nature of fixed rate obligations does expose the
Company to the risk of changes in the fair value of these instruments.
The Company has outstanding debt of $592 million, net of unamortized
discounts and including current maturities at September 30, 2000. The
contractual maturities of long-term debt and the associated average
interest rates are as follows:
<TABLE>
<CAPTION>
CONTRACTUAL
AMOUNTS WEIGHTED AVERAGE
MATURITY DATE IN THOUSANDS INTEREST RATE
------------- ------------ ----------------
<C> <C> <C>
2000 $ 35,269 9.20%
2001 169,779 9.42%
2002 66,270 11.56%
2003 31,618 10.72%
2004 141,975 11.55%
Thereafter 154,118 11.07%
</TABLE>
Foreign Currency Exchange Rates
Airline operators who fly internationally are exposed to the effect of
foreign exchange rate fluctuations on the U.S. dollar value of foreign
currency-denominated operating revenues and expenses. While
international operations generated 8.2% of TWA's operating revenues in
the first nine months of 2000, a substantial portion of these related
ticket sales are denominated in U.S. dollars. Additionally, no single
foreign currency is a material portion of that amount. The Company does
not have significant exposure to fluctuations in these currency rates
because of the short-term nature of maturities of receivables and
payables related to these operations. The Company has not undertaken
additional actions to cover this currency risk and does not engage in
any other currency risk management activity.
24
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PART II - OTHER INFORMATION
ITEM 5. OTHER INFORMATION
The Company's Board of Directors did not declare the dividend
payments on either the 8% Preferred Stock or the 9 1/4% Preferred Stock
which were due on March 15, June 15 and September 15, 2000, in the total
amounts of $5.2 million, $1.9 million and $3.5 million, respectively.
If the dividends on the 8% and 9 1/4% Preferred Stock were to continue
in arrears and if the arrears were to aggregate in an amount equal to at
least six quarterly dividends on either issue, the holders of the 8%
Preferred Stock and the 9 1/4% Preferred Stock voting separately as a
class without regard to the series, will be entitled to elect at the
next annual or special meeting of the shareholders 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.
As of October 31, 2000, 1,391,840 shares of 8% Preferred Stock had been
converted into 3,433,665 shares of TWA common stock, leaving 2,477,160
shares of 8% Preferred Stock outstanding. Each share of 8% Preferred Stock
is convertible into 2.467 shares of TWA common stock.
As of October 31, 2000, 1,046,825 shares of 9 1/4% Preferred Stock had
been converted into 6,625,348 shares of TWA common stock, leaving 678,175
shares of 9 1/4% Preferred Stock outstanding. Each share of 9 1/4% Preferred
Stock is convertible into 6.329 shares of TWA common stock.
ITEM 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) EXHIBITS
*2.1 - Joint Plan of Reorganization, dated May 12,
1995 (Appendix B to the Registrant's
Registration Statement on Form S-4,
Registration Number 33-84944, as amended)
*2.2 - Modification to Joint Plan of Reorganization,
dated July 14, 1995 and Supplemental
Modifications to Joint Plan of Reorganization
dated August 2, 1995 (Exhibit 2.5 to 6/95 10-Q)
*2.3 - Findings of Fact, Conclusions of Law and Order
Confirming Modified Joint Plan of
Reorganization, dated August 4, 1995, with
Exhibits A-B attached (Exhibit 2.6 to 6/95 10-Q)
*2.4 - Final Decree, dated December 28, 1995, related
to the 1995 Reorganization (Exhibit 2.7 to
12/31/95 Form 10-K)
*3(i) - 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)
*3(ii) - Amended and Restated By-Laws of Trans
World Airlines, Inc., effective September 28,
1999 (Exhibit 3(ii) to 9/99 10-Q)
*4.1 - Voting Trust Agreement, dated November 3,
1993, between TWA and LaSalle National Trust,
N.A. as trustee (Exhibit 4.3 to 9/93 10-Q)
*4.2 - IAM Trans World Employees' Stock Ownership
Plan and related Trust Agreement, dated August
31, 1993, between TWA, the IAM Plan Trustee
Committee and the IAM Trustee (Exhibit to 9/93
10-Q)
*4.3 - IFFA Trans World Employees' Stock Ownership
Plan and related Trust Agreement, dated August
31, 1993, between TWA, the IFFA Plan Trustee
Committee and the IFFA Trustee (Exhibit 4.5 to
9/93 10-Q)
*4.4 - Trans World Airlines, Inc. Employee Stock
Ownership Plan, dated August 31, 1993, First
Amendment thereto, dated October 31, 1993, and
related Trust Agreement, dated August 31,
1993, between TWA and the ESOP Trustee
(Exhibit 4.6 to 9/93 10-Q)
*4.5 - ALPA Stock Trust, dated August 31, 1993,
between TWA and the ALPA Trustee (Exhibit 4.7
to 9/93 10-Q)
*4.6 - Stockholders Agreement, dated November 3,
1993, among TWA, LaSalle National Trust, N.A.,
as Voting Trustee and the ALPA Trustee, IAM
Trustee, IFFA Trustee and Other Employee
Trustee (each as defined therein), as amended
by the Addendum to Stockholders dated November
3, 1993 (Exhibit 4.8 to 9/93 10-Q)
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<PAGE>
*4.7 - Registration Rights Agreement, dated
November 3, 1993, between TWA and the Initial
Significant Holders (Exhibit 4.9 to 9/93 10-Q)
*4.8 - Indenture between TWA and Harris Trust and
Savings Bank, dated November 3, 1993 relating
to TWA's 8% Senior Secured Notes Due 2000
(Exhibit 4.11 to 9/93 10-Q)
*4.9 - Indenture between TWA and American
National Bank and Trust Company of Chicago,
N.A., dated November 3, 1993 relating to TWA's
8% Secured Notes Due 2001 (Exhibit 4.12 to
9/93 10-Q)
*4.10 - The TWA Air Line Pilots 1995 Employee
Stock Ownership Plan, effective as of January
1, 1995 (Exhibit 4.12 to 9/95 10-Q)
*4.11 - TWA Air Line Pilots Supplemental Stock
Plan, effective September 1, 1994 (Exhibit
4.13 to 9/95 10-Q)
*4.12 - TWA Air Line Pilots Supplemental Stock
Plan Trust, effective August 23, 1995 (Exhibit
4.14 to 9/95 10-Q)
*4.13 - TWA Air Line Pilots Supplemental Stock
Plan Custodial Agreement, effective August 23,
1995 (Exhibit 4.15 to 9/95 10-Q)
*4.14 - Form of Indenture relating to TWA's 8%
Convertible Subordinated Debentures due 2006
(Exhibit 4.16 to Registrants Registration
Statement on Form S-3, No. 333-04977)
*4.15 - Indenture dated as of March 31, 1997
between TWA and First Security Bank, National
Association relating to TWA's 12% Senior
Secured Notes due 2002 (Exhibit 4.15 to
Registrant's Registration Statement on Form S-4,
No. 333-26645)
*4.16 - Form of 12% Senior Secured Note due 2002
(contained in Indenture filed as Exhibit 4.15)
*4.17 - Registration Rights Agreement dated as of
March 31, 1997 between the Company and the
Initial Purchaser relating to the 12% Senior
Secured Notes due 2002 and the warrants to
purchase 126.26 shares of TWA Common Stock
(Exhibit 4.17 to Registrant's Registration
Statement on Form S-4, No. 333-26645)
*4.18 - Warrant Agreement dated as of March 31,
1997 between the Company and American Stock
Transfer & Trust Company, as Warrant Agent,
relating to warrants to purchase 126.26 shares
of TWA Common Stock (Exhibit 4.18 to
Registrant's Registration Statement on Form
S-4, No. 333-26645)
*4.19 - Form of Indenture relating to TWA's 9 1/4%
Convertible Subordinated Debentures due 2007
(Exhibit 4.19 to Registrant's Registration
Statement on Form S-3, No. 333-44689)
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<PAGE>
*4.20 - Registration Rights Agreement dated as of
December 2, 1997 between the Company and the
Initial Purchasers (Exhibit 4.20 to
Registrant's Registration Statement on Form S-3,
No. 333-44689)
*4.21 - Indenture dated as of December 9, 1997 by
and between TWA and First Security Bank,
National Association, as Trustee, relating to
TWA's 11 1/2% Senior Secured Notes due 2004
(Exhibit 4.21 to Registrant's Registration
Statement on Form S-4, No. 333-44661)
*4.22 - Form 11 1/2% Senior Secured Note due 2004
(contained in Indenture filed as Exhibit 4.21)
*4.23 - Registration Rights Agreement dated as of
December 9, 1997 among the Company and Lazard
Freres & Co. LLC and PaineWebber Incorporated,
as initial purchasers, relating to TWA's
11 1/2% Senior Secured Notes due 2004 (Exhibit
4.23 to Registrant's Registration Statement on
Form S-4, No. 333-44661)
*4.24 - Sale and Service Agreement dated as of
December 30, 1997 between TWA and
Constellation Finance LLC, as purchaser,
relating to TWA's receivables (Exhibit 4.24 to
Registrant's Registration Statement on Form S-4,
No. 333-44661)
*4.25 - Registration Rights Agreement dated as of
March 3, 1998 between the Company and the
Initial Purchaser (Exhibit 4.25 to
Registrant's Registration Statement on Form S-4,
No. 333-59405)
*4.26 - Indenture dated as of March 3, 1998 by and
between TWA and First Security Bank, National
Association, as Trustee, relating to TWA's 11 3/8%
Senior Notes due 2006 (Exhibit 4.26 to Registrant's
Registration Statement on Form S-4, No. 333-59405)
*4.27 - Aircraft Sale and Note Purchase Agreement
dated as of April 9, 1998 among TWA, First
Security Bank, National Association, as Owner
Trustee and Seven Sixty Seven Leasing, Inc.
(Exhibit No. 4.27 to Registrant's Registration
Statement on Form S-4, No. 333-59405)
*4.28 - Indenture dated as of April 21, 1998 by
and between TWA and First Security Bank,
National Association, as Trustee, relating to
TWA's 11 3/8% Senior Secured Notes due 2003
(Exhibit No. 4.28 to Registrant's Registration
Statement on Form S-4, No. 333-59405)
*4.29 - Form of 11 3/8% Senior Secured Notes due
2003 (contained as Exhibit 1 to Rule
144A/Regulation S Appendix to Indenture in
Exhibit 4.28)
*4.30 - Registration Rights Agreement dated as of
April 21, 1998 between the Company, Lazard
Freres & Co. LLC and First Security Bank,
National Association relating to the 11 3/8%
Senior Secured Notes due 2003 (Exhibit 4.31 to
Registrant's Registration Statement on Form S-3,
No. 333-56991)
27
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11 - Statement of computation of per share
earnings
27 - Financial Data Schedule
(b) REPORTS ON FORM 8-K
No reports on Form 8-K were filed during the third quarter
of 2000.
[FN]
------
*Incorporated by reference
28
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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: November 14, 2000 By: /s/ Michael J. Palumbo
------------------------
Michael J. Palumbo
Executive Vice President and
Chief Financial Officer
29
