Russians could rescue TWA

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The Independent Online
Unlikely though it may seem, it could be "Russians to the rescue" for TWA following news yesterday that Transaero, a Moscow-based carrier with routes to 30 cities, is preparing a bid to take control of the ailing US airline.

The approach is being made through a New Jersey investment company, Strategic Capital Group. Outline plans for the bid were presented by Strategic Capital to the TWA board at its headquarters in St Louis earlier this week. Final terms are expected to be presented next month.

Transaero, a privately-held airline founded by the Russian state carrier Aeroflot and a group of Russian plane makers in 1990, would essentially use TWA as a feeder airline in the US to help it achieve its own vision of becoming a global carrier.

TWA, which has twice entered bankruptcy, may not be entirely closed to the idea. Badly hurt by the crash of TWA 800 last summer, the airline is expected shortly to announce a 1996 loss of around $150m (pounds 93m). It will thus be alone among the main US airlines not to have made a profit last year.

There was no comment yesterday from TWA, the seventh-largest US carrier. "It's speculation and we can't confirm any of it," company spokesman, John McDonald said. "We talk to a lot of people a lot of the time and when we're ready to do business with people we make announcements."

In Moscow, however, the vice-chairman of Transaero, Grigory Gurtovoi, said contacts with TWA had been encouraging. "We view the initial reaction as positive," he said.

Transaero has grown to become Russia's second carrier and has earned a reputation for better service than Aereflot. It was the first Russian carrier to introduce a frequent flyer plan. Today, only 5 per cent of the company is held by Aeroflot, while 75 per cent is in the hands of management.

"If the deal with TWA does not work out for any reason, we'll continue to look for partners, first of all among US companies," Mr Gurtovoi said.

Transaero's current route network out of Moscow includes flights to Frankfurt, Berlin, London, Israel and, in the US, Orlando and Los Angeles.

It is, however, much smaller than TWA with only 14 planes and 2,300 employees.

To take 51 per cent of TWA - which is 30 per cent owned by its employees - would cost the group in the vicinity of $3bn.