As most of the American airline industry claws itself back to financial health after several years of losses, TWA, the seventh-biggest US carrier, filed for bankruptcy protection yesterday for the second time in four years.
Officials of the once-mighty airline, which now flies only a limited international network to 12 foreign countries and serves 73 domestic US destinations, said service would not be affected. The carrier hopes to emerge from protection as early as September.
The company hopes to enter bankruptcy with a pre-package recovery that already has creditor approval. It would be forgiven loans of $500 million, reducing overall debt to $1.2 billion.
The move should considerably improve the airline's chances of survival, although its lack of available cash and reduced route map means it will still face a hard task to return to profitability. It emerged from its previous bankruptcy status in November 1993.
"The strong support our plan has received from creditors is a significant victory for the company," TWA's chief executive, Jeffrey Erickson, declared. "This is a good day for TWA. We can now pursue our strategy of becoming the airline of choice for the value-conscious business traveller and the price-conscious leisure traveller."
Much is at stake for the city of St Louis, Missouri, which would lose a large part of its economy were TWA to succumb. For that reason, there seemed little doubt that bankruptcy protection would be granted by the courts.
Under the deal, the airline's creditors would receive stock in exchange for debt. The creditors' combined interests in the carrier would therefore rise to about 70 per cent from 55 per cent.Reuse content