Word: icahn
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...celebrate his victory in the hostile takeover battle for Trans World Airlines in August 1985, corporate raider Carl Icahn donned a pilot's cap and uniform jacket and paraded triumphantly around his Manhattan office. The parade didn't last long. Plagued by labor strife, mounting losses and bruising competition, TWA became more of a financial straitjacket for the erstwhile wizard than the trophy he had envisioned. In recent years, as he struggled to keep the now bankrupt carrier aloft, Icahn groped for a graceful way to bail out. Despite near frantic efforts, he was unable to find a willing buyer...
...deal that allows him to save some face and salvage what's left of his investment, Icahn agreed last week to step down and turn over the controls of TWA to the company's union-led employees in return for major concessions that are designed to keep the airline flying. Under the tentative agreement, TWA's 28,000 flight attendants, baggage handlers, mechanics and pilots would swap a 15% pay cut for a 45% equity stake in the carrier. The airline's creditors would acquire the remaining 55% in exchange for forgiving more than $1 billion in debts. Icahn currently...
...deal is probably as good as Icahn can get, given TWA's bumpy flight path since he came aboard. Less than three months after he officially gained control, the airline's 6,000 flight attendants walked off the job for 10 weeks. In April 1986, a month after the strike began, a terrorist bomb exploded in mid-air on a flight bound for Athens, killing four passengers and wounding nine others. TWA's overseas business never recovered. Neither did its relationship with labor. Icahn's zeal to cut costs has also led to confrontations with TWA's mechanics and pilots...
Inside ailing companies, Chapter 11 filings can lower morale and strain already tense relations between bosses and employees. Some TWA workers question owner Carl Icahn's motives for placing the airline in Chapter 11 in January. Instead of striving to clean up the company's finances, they say, Icahn's real goal may be to use Chapter 11 as a shelter from which to conduct fare wars like his current battle with American Airlines. "Chapter 11 can be a good opportunity for a company to cleanse itself of past mistakes," says Bill Compton, chairman of the pilots' union local...
...That's not true. How can I drive him out of business? He's already bankrupt! If anyone is trying to drive TWA out of business, it is Carl Icahn. Look, we will take a bigger hit on our revenues from the new fares than the weaker carriers will. American, United and Delta carry more full-fare passengers than TWA does, and it is the full fares that...