Icahn ready to step down at TWA

THE CORPORATE raider Carl Icahn is preparing to step down as chairman of Trans World Airlines as part of a plan under which a group of creditors and employees would assume ownership of the troubled carrier.

The plan, which will have to be cleared by the federal bankruptcy court, envisages creditors swapping around dollars 1bn ( pounds 530m) in debt obligations for a 55 per cent stake in TWA. The remaining 45 per cent would be acquired by airline employees in return for lower wages and changes to working practices.

Mr Icahn would invest more than dollars 100m to provide liquidity pending court approval of the deal, which would also involve TWA emerging from Chapter 11 bankruptcy protection.

The plan emerged from a weekend of talks in New York between Mr Icahn, members of the creditors' committee and representatives of three unions, the International Association of Machinists, the Air Line Pilots Association and the Independent Federation of Flight Attendants. TWA employs a total of 28,000.

A spokesman for one of the unions noted that, although agreement in principle had been reached, the deal was not yet signed and sealed. Mr Icahn has made few friends at TWA, selling routes to raise cash and holding back on investment.