Ramon Lopez/WASHINGTON DC Chris Jasper/LONDON

American Airlines has raised its bid for Trans World Airlines to $742 million, with the latter recommending that a US federal bankruptcy court accept the sweetened offer. United Airlines and regional operator Atlantic Coast Airlines (ACA) have meanwhile confirmed plans for ACA to buy three US Airways carriers as part of the planned merger between the two majors, while Delta Air Lines chief executive Leo Mullin has cast doubt on suggestions that Continental Airlines could engineer a 'reverse takeover' of Delta in response to the other deals.


American's improved bid for TWA followed an initial $500 million one, and topped a late $650 million offer from a group led by TWA's former owner Carl Icahn and investment banker Brian Freeman. Investor group Jet Acquisitions has bid $889 million, although doubts remain over its ability to raise the cash, while Galileo International is bidding only for TWA's stake in the Worldspan computer reservation system.

Despite TWA's recommendation, which was due to be issued on 9 March, the court may approve an alternative offer. The Icahn bid is opposed by unions critical of what they say was his "prior plundering" of the airline.

American's plan will see it assume $3.5 billion of leases/debt on 175 TWA aircraft (shedding 10). It would retain TWA's St Louis hub, reservation centres, maintenance bases and facilities at 60 airports, terminating leases at 10 others where it is already strong.

ACA's move for US Airways Express carriers PSA Airlines, Piedmont Airlines and Allegheny Airlines will cost it $200 million, should it take all three, with an 18-month window for completion. United says the sale is meant to alleviate labour problems stemming from the US Airways takeover, claiming it cannot provide the regionals' flight attendants the same pay/benefits as mainline crews.

A wholly-independent franchise carrier for United Express and Delta Connection, ACA says it will operate the regional trio as subsidiaries pending a final agreement. Its new deal for United Express operations, accruing a fee for each departure, will be extended to cover the three carriers, while it will receive $10.5 million if the takeovers fail.

ACA says the takeovers will "add additional growth to our business and additional regional jet opportunities". The carrier is moving to all-jet operations, so Bombardier Dash 8 and Fairchild Dornier 328 turboprops operated by the three may be replaced.

United has meanwhile agreed to extend US Airways' contract for regional jet operations by Mesa Air Group for two years, contingent upon the mega-merger with US going ahead. Mesa operates 32 regional jets for US, but the contract had appeared under threat, United having ended its own codeshare deal with Mesa in 1998.

United and US have agreed to extend the period for completing their merger beyond 2 April to allow the US Department of Justice to further study the implications of American's planned purchase of other US Airways assets, including half of US Airways Shuttle and 49% of DC Air.

Delta's Mullin says he backs American's "rescue" of TWA, but opposes the United-US deal. He adds that if both mergers go ahead a Delta-Continental tie-up "would make sense", but says a take-over of his airline by Continental, bypassing Northwest Airlines' ability to veto a Delta bid for the smaller airline appears unrealistic. "People have asked me how it could be done, and I have to say it beats me," he told Flight International.

Source: Flight International