TWA Confirms Talks With USAir on Sale of Assets : Airlines: Three-way deal reportedly involves British Airways. It would spell the end for Trans World.
Trans World Airlines on Monday confirmed that it has discussed the sale of some assets to USAir in response to a report of a three-way deal involving British Airways.
The discussions between USAir and TWA are the most recent example of second-string carriers struggling to survive in the shadow of the Big Three airlines--American, Delta and United--and other global giants. Growing larger through mergers or acquisition with stronger partners appears to be the only way many carriers can survive in the long run, analysts say.
“Everybody and his pet dog are out shopping,” said Barbara Beyer, president of Avmark, a Washington-based aviation industry consulting firm. “If they are not shopping for USAir, then they are out shopping for Quantas, Air New Zealand or Sabena.”
TWA confirmed the talks after a report in the Wall Street Journal on Monday said USAir was considering the acquisition as part of a deal financed by British Airways. In return for providing an undisclosed sum needed to complete the purchase of most of TWA’s assets, British Airways would take a 49% stake in USAir. TWA said USAir has yet to respond with an offer.
The deal would mean the death of TWA, which filed for Chapter 11 bankruptcy protection earlier this year after a long decline. For its money, British Air would end up with a long-sought network in North America that it could tie into its international routes across the Atlantic. USAir would gain a larger domestic operation through TWA’s St. Louis hub and a strong international partner in the form of British Air.
During the last two years, USAir, based in Arlington, Va., has undergone a painful retrenchment that saw it abandon most of the California market and focus primarily on the Northeast.
USAir has “nice, solid, short-haul routes,” Beyer said. “But it does not have the resources to defend itself against the mega-carriers.”
All three carriers have been involved in previous merger talks.
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