REBECCA RAYKO / FLORIDA
American Airlines chief executive Don Carty says the company has made substantial progress towards integrating the operations of Trans World Airlines into its own and expects the process to be completed by the end of March 2002.
Calling it the largest and most complex airline merger in history, Carty says buying TWA is a critical step toward American's long-term goal of network leadership. The key to successfully integrating TWA is ridding it of what Carty calls the "anchors that hung around the necks of TWA management". These include a "horrible" balance sheet and former TWA owner Carl Icahn's special ticket purchasing arrangement that allowed unlimited ticket sales at deep discounts. "We didn't plan to buy TWA and run it as it was," Carty says.
American's stronger balance sheet has allowed it to renegotiate thousands of TWA service contracts at more favourable rates. Parent AMR's stronger financial position allowed it to negotiate $200m per year off TWA's aircraft lease rates alone, says Carty. However, labour will remain an integration challenge.
Carty is yet to determine the fate of TWA's three regional airline partners. He does not intend to buy, Chautauqua, Corporate Airlines or Trans States and will re-evaluate whether to keep some or all of them. "Labour problems will determine their value in the future, " says Carty.
From a customer perspective, the integration is practically complete, Carty says. Frequent flyer programmes and other amenities have already been combined. Seats will be removed from TWA's domestic fleet to conform with American's roomier interiors by September, and the international fleet will be reconfigured a few weeks later.
Source: Flight International
