THE VIRGINIAN-PILOT
Copyright (c) 1995, Landmark Communications, Inc.
DATE: Friday, August 25, 1995 TAG: 9508250634
SECTION: BUSINESS PAGE: D1 EDITION: FINAL
SOURCE: STAFF AND WIRE REPORT
DATELINE: ST. LOUIS LENGTH: Medium: 51 lines
Trans World Airlines Inc. has emerged from Chapter 11 bankruptcy with a lighter load - $500 million in debt wiped out through a prepackaged deal with creditors.
``The implementation of our financial restructuring today brings to an end what has been a challenging period in TWA's history,'' president and chief executive officer Jeffrey H. Erickson said Wednesday night.
The St. Louis-based airline plans to build an East Coast reservations center in Norfolk employing as many as 500 workers with a $13 million annual payroll.
Incentives offered by the city and state encouraged the airline to select Norfolk for the planned 40,000-square-foot building in the Lake Wright Executive Center. The city contributed land and the state provided $450,000.
TWA has struggled to stay in business during the past year. Unprofitable routes have been eliminated, jobs cut and other operating costs reduced. Workers have also agreed to wage concessions and given up shares of stock in the company to creditors in exchange for the reduction in debt.
By the time the matter reached bankruptcy court June 30, approval seemed little more than a formality.
A bankruptcy judge approved the plan earlier this month. The process was able to move so swiftly because TWA and creditors agreed to the plan before the bankruptcy filing.
The cornerstone of the plan trades stock to creditors in exchange for the reduction in debt. TWA officials said the cut in debt will reduce the company's interest expense by more than $50 million annually.
``They were fortunate in being able to reduce their debt,'' analyst Phil Brannon of Mabon Securities Corp. said Wednesday. ``And they are coming out into a better environment. There are fewer fare wars than there were a few years ago.''
TWA, the nation's seventh largest carrier, employs about 22,000 people, 7,500 in the St. Louis area.
TWA's second trip to bankruptcy court has been much different from its first, in January 1992, which required 21 months for creditors and the court to approve a plan.
Under the new reorganization plan, TWA employees will own 30 percent of the airline's stock, down from 45 percent.
On the American Stock Exchange, TWA shares rose $1.25 to $6.25. by CNB