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Special Event

TWA President Bill Compton Announces $500M Buyout By American Airlines

Aired January 10, 2001 - 12:33 p.m. ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JEANNE MESERVE, CNN ANCHOR: There were reports earlier this week that American Airlines was buying TWA. Today, a press conference to make it official. Let's go to St. Louis and listen.

(JOINED IN PROGRESS)

UNIDENTIFIED MALE: ... acquired by American Airlines with the sale of assets in a Chapter 11 bankruptcy proceeding. We did make that filing this morning in Delaware. The filing includes a $200 million debtor and possession financing from American Airline that will finance ongoing operations, and it also includes an asset purchase agreement for American to acquire substantially all of TWA's assets.

So TWA will continue to operate business as usual for a period of several months while this transaction is completed and a transition is undertaken. Today it's business as usual for customers, for employees at TWA. But it's not business as usual here because we have some distinguished guests I want to introduce to you. You know Bill Compton, who is the president and chief executive officer of Trans World Airlines. Also joining us today is Bob Baker. Bob is vice chairman of American Airlines with a long and illustrious career in many facets of the business, most notably in operations. And in addition to being a senior executive of American, he's one of our industry's best known statesman, if you will, in the area of airline operations.

So I'm going to turn it over to Bill, Bill is going to turn it over to Bob, and then we will entertain your questions -- Bill.

BILL COMPTON, PRESIDENT & CEO, TWA: Thank you, Mark.

For TWA, this is a day of both excitement and sadness; sadness because we're starting a process that will culminate in the retirement of the oldest and proudest name in U.S. airline industry; excitement because we've reached an agreement that will resolve the TWA story in a way that protects the jobs of thousands of TWA employees in St. Louis, Kansas City, New York, Los Angeles and elsewhere throughout our system; an agreement that will protect air service in St. Louis and maintain St. Louis's role as a major air transportation center; an agreement that will provide new benefits and new value for TWA's customers here in St. Louis and around the world. TWA's challenges the last couple of years are well known and have been amply reported. In the face of those challenges, the dedicated professionals of TWA built an airline that leads the industry in operational excellence and on-time performance with an attractive new fleet, new roots, new destinations and a new attitude.

There were so many things that needed to be done to fix TWA that, unfortunately, we just needed more time to accomplish them. Still, we're very happy to be able to say that we found the way for the legacy for TWA to live on. By forestalling the shutdown of the airline and selling it as a going concern, we will be able to realize value from the franchise for the majority of our constituents. Jobs will be preserved. Our TWA employees will be able continue delivering great service to our customers. The communities that make up our system will continue to be served.

It was very important to the management of TWA that the solution we achieved would provide for the people of this airline. In addition to recovering the most from the operation, this agreement with American does something no one else was willing to do. American will provide job security for practically all of our employees, and will take over responsibility for our retirees' medical and dental benefits. That is very, very important, and we are grateful to American for stepping up to this important issue.

We are pleased, too, that we are able to pass on the legacy of TWA to an airline whose history is just as rich as our own. More than 60 years ago, one of my predecessors, as president of TWA, Jack Fry, went to Donald Douglas of the Douglas Aircraft Company with an idea for a new kind of airplane. Together, TWA and Douglas developed the DC-2, which was the prototype of the modern all-metal airliner. The DC-2 was a great airplane. It was better than any airplane that was flying back then.

But American Airlines decided it wasn't quite good enough. American went back to Douglas and said, let's change it a little here, let's tweak it a little here, let's make it a little bigger there. And the airplane they ended up with was the DC-3, perhaps the most important aircraft in the history of civil aviation.

MESERVE: Bill Compton, TWA president and CEO, announcing the $500 million deal under which American will buy TWA. Compton called this a day of excitement and sadness; sad because one of the oldest and proudest names in U.S. aviation is being retired, but exciting because the jobs of TWA employees will be preserved under the deal. St. Louis will continue to be a major hub of operations. He said, "there were so many things that needed to be done to fix TWA and we just didn't have the time to do them." TWA has failed to turn a profit since 1988.

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