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EXHIBIT 99.1
TWA NEWS
FOR IMMEDIATE RELEASE Media Contact: Julia Bishop-Cross
314/589-3214
Investor Contact: Laura McKee
314/589-3311
AMERICAN TO ACQUIRE SUBSTANTIALLY ALL OF TWA'S ASSETS
TWA Files for Protection Under Chapter 11; American to Provide DIP Financing
St. Louis, January 10, 2001 - Trans World Airlines, Inc. (AMEX: TWA) today
announced that it has reached an agreement with American Airlines, Inc.
("American"), a subsidiary of AMR Corporation (NYSE: AMR), in which American
will acquire substantially all of TWA's assets. The asset purchase agreement
includes TWA's jet aircraft as well as numerous routes and gates throughout the
TWA system and significant maintenance facilities. The agreement will protect
air service in St. Louis and maintain St. Louis's role as a major transportation
center. The agreement also calls for American to offer employment to almost all
of TWA's 20,000 employees. TWA currently operates approximately 190 aircraft
and approximately 800 daily flights.
Concurrently, TWA said today that it and certain subsidiaries had voluntarily
filed petitions in the U.S. District Court in Wilmington, Delaware for relief
under Chapter 11 of the U.S. Bankruptcy Code. In order for the agreement with
American to go forward, TWA also filed a motion seeking the Court's approval of
an asset purchase agreement with American pursuant to section 363 of the
Bankruptcy Code.
TWA has received a commitment from American for $200 million in Debtor in
Possession (DIP) financing and anticipates receiving prompt approval for that
financing from the Bankruptcy Court. The DIP financing will be collateralized
by security interests in the Company's assets, and is intended to enable TWA's
continued operation during the transition period, which may take up to six
months. The sale of TWA's assets to American is subject to, among other
things, higher and better offers as a result of a bidding process plus
Bankruptcy Court approval. The Court will set a hearing date and timetable.
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American Acquires TWA's Assets
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William F. Compton, president and chief executive officer of TWA, said, "This is
both a sad and exciting day for TWA. It is sad because we are starting a
process that will culminate in the retirement of the oldest and proudest name in
the U.S. airline industry. I am, however, heartened by the fact that we have
been able to work out a solution with American that we believe to be the best
possible outcome for our creditors because it extracts franchise value by
selling the company as an operating concern.
"American has agreed to protect the jobs of substantially all of our thousands
of employees in St. Louis, Kansas City, New York and elsewhere. American also
agreed to take responsibility for our retirees' medical and dental benefits now
provided by TWA. And, this agreement will be beneficial for our customers, who
will enjoy uninterrupted service," Compton said.
The agreement with American calls for significant reciprocity in many customer
programs. TWA passengers who are AAdvantage frequent flyer program members will
soon be able to accrue AAdvantage miles on TWA flights. Ambassadors Club
memberships will be first honored and subsequently transferred into American's
Admirals Club program. Customers in TWA's home city of St. Louis will continue
to enjoy the convenience of a network hub schedule.
In making the filing to the Bankruptcy Court, TWA noted that its steadily
deteriorating financial condition, which was exacerbated by recent staggering
increases in jet fuel costs, had prevented the company from capitalizing on the
significant progress made in recent years to improve its operating efficiencies.
Fleet improvement efforts and improvements to TWA's route system, as well as
productivity improvements helped to improve revenue and reduce controllable
costs. However, the timing of the company's recent capital investments coupled
with the unanticipated fuel increases caused a drain on cash flow and made it
necessary for TWA to seek the protection of the Bankruptcy Code in order to
sustain operations.
Statements in this news release contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933, as amended, and Section
21E of the Securities Act of 1934, as amended. These statements are based on
management's current expectations and are naturally subject to uncertainty and
changes in circumstances. All forward-looking statements in this release are
based upon information available to the Company on the date of this release.
The Company undertakes no obligation to publicly update or revise any forward-
looking statements, whether as a result of new information, future events or
otherwise. The forward-looking statements contained in this release include
statements about future financial and operating results and benefits of the
pending transactions described herein. Forward-looking statements are subject
to a number of factors that could cause actual results to differ materially from
our expectations. In addition to other possible factors not listed, factors
that could cause the actual results and benefits of these pending transactions
to differ materially from those expressed in forward-looking statements include
inability to obtain, or delays in obtaining, the required bankruptcy court and
regulatory approvals; inability of American to successfully integrate the
workforce of TWA to be employed by American into American's present workforce;
the ability to successfully sell the Company's remaining
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assets; actions taken by TWA's creditors after the bankruptcy filing; continued
access to adequate Debtor In Possession financing; actions of competitors,
including responses to the pending transactions; and other factors, including
but not limited to those discussed in the Company's Securities and Exchange
Commission filings, including but not limited to the Form 10-K for the year
ended December 31, 1999.
