TWA Proposes To Buy Back All of Its Debt --- Ailing Airline Seeks to Shed Heavy Interest Burden, Offers Discounted Prices
Trans World Airlines, in a restructuring effort, proposed to purchase its $1.2 billion in outstanding debt for cash, offering debtholders deeply discounted prices.</br></br>The move is an attempt to rid TWA of an expensive item -- interest expenses on the debt -- which has hamstrung the carrier since owner Carl Icahn took it private in 1988. The Mt. Kisco, N.Y., airline's highly leveraged position has grown more troublesome in recent months amid high jet fuel prices and the effects on air travel of the recession and the Mideast war. Since January, TWA has failed to meet interest and principal payments due on its debt.</br></br>In another indication of TWA's troubles, the carrier yesterday posted a first-quarter net loss of $88.2 million, compared with a year-ago net loss of $143 million. This year's loss was narrowed by the recent $110 million sale of TWA's Chicago-London route authority to AMR Corp.'s American Airlines.</br></br>In the first quarter, TWA reported an operating loss of $144.4 million, wider than the year-earlier's $100.7 million operating loss. Revenue for the quarter fell 19% to $820.2 million from $1.01 billion a year-earlier.</br></br>In the debt-purchase offer, Mr. Icahn estimates he personally would lose "in excess" of $40 million on TWA debt he holds. Still, some debt specialists believe a successful restructuring could strengthen the airline and make it a much more valuable property for Mr. Icahn, who controls 90% of its stock.