Trans World Airlines announced Jan. 10 that it has reached an agreement with American Airlines in which American will acquire substantially all of TWA’s assets. The asset purchase agreement includes TWA’s jet aircraft as well as numerous routes and gates throughout the TWA system and significant maintenance facilities. The agreement will protect air service in St. Louis and maintain St. Louis’s role as a major transportation center. The agreement also calls for American to offer employment to almost all of TWA’s 20,000 employees. TWA currently operates approximately 190 aircraft and approximately 800 daily flights.

Concurrently, TWA voluntarily filed petitions in U.S. District Court for Chapter 11 protection. In order for the agreement with American to go forward, TWA also filed a motion seeking the Court’s approval of an asset purchase agreement with American.

TWA received a commitment from American for $200 million in Debtor in Possession (DIP) financing and anticipates receiving prompt approval for that financing from the Bankruptcy Court. The DIP financing will be collateralized by security interests in the carriers assets, and is intended to ensure TWA’s continued operation during the transition period, which may take up to six months. The sale of TWA’s assets to American is subject to, alternative offers as a result of a bidding process plus bankruptcy court approval. Former TWA head Carl Icahn could be among those making a bid for TWA’s assets, say reports. The bankruptcy court will set a hearing date and timetable.

William F. Compton, president and chief executive officer of TWA, said, “This is both a sad and exciting day for TWA. It is sad because we are starting a process that will culminate in the retirement of the oldest and proudest name in the U.S. airline industry. I am, however, heartened by the fact that we have been able to work out a solution with American that we believe to be the best possible outcome for our creditors because it extracts franchise value by selling the company as an operating concern.

“American has agreed to protect the jobs of substantially all of our thousands of employees in St. Louis, Kansas City, New York and elsewhere. American also agreed to take responsibility for our retirees’ medical and dental benefits now provided by TWA. And, this agreement will be beneficial for our customers, who will enjoy uninterrupted service,” Compton said.