Trans World Airlines officially emerged Wednesday as a survivor of the embattled and financially depressed U.S. airline industry.
The carrier, one of the icons of the airline business, was released from bankruptcy after operating for nearly two years under the protection of the federal courts.
The company said its reorganization plan, which was approved by the U.S. Bankruptcy Court in Wilmington, Del., will reduce its debt by about $1 billion.
In addition, TWA is realizing an added $600 million in labor cost savings over three years through employee concessions, officials of the carrier said.
Its survival confounds industry analysts and insiders who had predicted that TWA would join the ranks of Eastern Airlines, Pan American World Airways and the original Midway Airlines, which all died in bankruptcy, unable to satisfy creditor claims.
“This is the day that 25,000 TWA employees, travel industry friends and our loyal customers have all been waiting for,” said William R. Howard, TWA’s chairman and chief executive. “This day could not have been achieved without the diligence, skill and cooperation of TWA’s employees and creditors.”
TWA, weakened by enormous debts and the effects of a recessionary economy, entered bankruptcy in January 1992. At the time, the carrier was under the leadership of corporate raider Carl Icahn. Icahn eventually sold his stake in the airline, calling it the worst investment he ever made.
TWA is operating under the leadership of Howard, an airline industry veteran and former chairman of Piedmont Airlines.
Under its bankruptcy reorganization plan, 45 percent of TWA will now be owned by its employees. The remaining 55 percent of the equity in the carrier will be owned by TWA’s creditors.
TWA is based in Mount Kisco, N.Y. However, the airline is expected to relocate its headquarters early next year to St. Louis, site of its principal hub.
