TWA takeover imminent, union signs off on deal

David Scott

Friday, April 6, 2001 | 10:55 a.m.

ST. LOUIS -- Just days before its asset sale to AMR Corp.'s American Airlines is expected to close, Trans World Airlines Inc. has reached an agreement on contract waivers with its largest union.

TWA needed the agreement with the International Association of Machinists and Aerospace Workers, which represents the vast majority of TWA's 20,000 workers, in order for the deal to close.

"We applaud the IAM's conscientious leadership and representation of their members on this issue," said TWA CEO William Compton.

Had TWA not reached the agreement with the IAM, the bankrupt airline was ready to ask the federal bankruptcy court in Delaware overseeing the sale to reject its entire labor agreement with the IAM.

"This transition agreement reached was the best we could accomplish under these very difficult circumstances," William O'Driscoll, president of the union, said in a letter to members. "The alternative -- extinguishing our agreements in their entirety -- was never a viable option."

Tuesday, the TWA branch of the Air Line Pilots Association reached a similar agreement with the airline.

While the deals with the machinists and pilots unions will allow the deal to close, American's three unions said last week they cannot support the sale because they fear the difficulty of absorbing TWA's workers could cause turmoil.

A final hearing on the asset sale started this morning before U.S. Bankruptcy Judge Peter Walsh in Wilmington, Del.

Officials from both airlines say the deal, announced Jan. 10 when TWA filed for bankruptcy, could conclude within the next few days. American is buying most of TWA's assets, including its St. Louis hub, for $742 million. American also will assume $3.5 billion in aircraft leases.