Word: twa
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...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...
...abrasive style has touched off an exodus of top managerial talent. In the past two years, TWA has lost its chief operating officer, general counsel, senior vice presidents of finance, marketing, flight operations and strategic planning, plus its vice presidents of advertising, government affairs, compensation, public affairs and maintenance operations. Perhaps Icahn's biggest managerial blunder was engaging in a series of unwinnable fare wars with the industry's big eagles: United, American and Delta. Subsequent price cutting helped land TWA in bankruptcy court last January...
...years ago in order to greenmail management into paying a higher price for his stock. Icahn confounded the skeptics by actually taking control and running the airline, - but he has made no secret in recent years of wanting out of his money-losing investment. Throughout last week, Icahn and TWA's labor unions hammered away at a deal that would turn over the airline to its 28,000 workers and allow the New York takeover artist to bail out and save face at the same time...
Though at week's end the talks were ongoing, all the parties are in agreement that Icahn's departure is the desired outcome. Once the nation's No. 3 carrier, TWA now ranks a distant seventh. The reluctant chairman wants out of a bad investment, which he claims has cost him personally at least $100 million. The airline has lost more than $511 million since 1990, including $104 million in this year's first quarter. TWA's workers, angered by Icahn's relentless quest to cut costs, blame him for driving the carrier into the ground. But before Icahn...