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CNN Today

American Airlines to Purchase TWA

Aired January 10, 2001 - 2:27 p.m. ET

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

NATALIE ALLEN, CNN ANCHOR: Well, as expected, the nation's second-largest, has unveiled a plan to buy Trans World Airlines, one of the country's oldest carriers.

TWA has filed for chapter 11 bankruptcy protection for a third time and will sell most of its assets to American for $500 million. The deal also calls for AMR, the parent company of American, to buy key assets from United Airlines and US Airways, should their merger be approved. Plus, American plans to purchase a 49 percent stake in DC Air.

(BEGIN VIDEO CLIP)

DONALD CARTY, CHAIRMAN & CEO, AMERICAN AIRLINES: I'm very excited about these transactions because they provide really immediate and significant benefits to American Airlines, to all of our employees, and to the flying public.

I'm particularly pleased that our agreement to purchase substantially all of the assets of TWA means that TWA is going to be integrated into American with continued opportunity for TWA employees and a continued hub operation in St. Louis.

(END VIDEO CLIP)

ALLEN: All of this contingent upon approval from the bankruptcy court and of the United-US Airways merger. For now, TWA executives say it is "business as usual."

LOU WATERS, CNN ANCHOR: Eventually, though, what will this buyout mean for the employees of these various airlines, and for those who fly them? Let's get some perspective on that. Let's bring in CNN's Charles Zewe, who's at Dallas-Fort Worth Airport today, one of the major hubs for American Airlines -- Charles.

CHARLES ZEWE, CNN CORRESPONDENT: Lou, in fact, this is home base for American. They're based just not far from the airport where we are right now. America CEO Don Carty, as you heard, touting the deal today as a good thing, not only for his airline, which will make it a bigger and better airline in his words, but also for the more than 20,000 employees at TWA, who Carty said will keep their jobs. Carty saying, it was likely that the employees of TWA would have probably lost jobs, either this week or next, had American not stepped in and closed this deal with TWA to take over. What does the flying public think of this? Well, the people we talked at DFW today, didn't seem to know enough and were split about what they think about the deal.

(BEGIN VIDEO CLIP)

UNIDENTIFIED FEMALE: I think that with the consolidation that there will be higher prices. That's always a concern.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It seems like that's what the airlines seem to be doing these days, instead of competing with each other, they're just merging and trying to monopolize.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: I would be concerned that there would be no incentive to offer the lower-priced fares.

(END VIDEO CLIP)

(BEGIN VIDEO CLIP)

UNIDENTIFIED MALE: It's going to hurt competition, so the little guy is in deep trouble.

(END VIDEO CLIP)

ZEWE: Airline analysts say that's not clear yet, whether the little guy -- the little traveler will be in trouble. Some airline analysts say, after the American-TWA deal is completed and United completes its acquisition of US Airways, if that happens as planned, that there could be only two mega-carriers left, to compete against the likes of Delta Air lines, Northwest and Continental.

Airline pilots association officials, that's the union that represents American's pilots, have said they won't necessarily oppose the deal. There are some issues of seniority, of TWA pilots and American pilots -- they'll have to work that out. But Jim Philpon (ph), a spokesman for the union, is saying they won't necessarily oppose the deal -- Philpon saying, anything that's good for the airline they will support.

Charles Zewe, CNN live, Dallas-Fort Worth International Airport.

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