Trans World Airlines Inc. is about to land in U.S. Bankruptcy Court for the second time in four years -- but this time it expects the visit to be brief.
TWA, a once-proud trans-Atlantic carrier that has been hammered in recent years by a takeover fight, fare wars, an aging fleet and suffocating debt, is trying to take the first step toward sustained profits by slashing its $1.7 billion of long-term debt.
Its proposal: TWA's creditors and public noteholders would forgive $500 million of the debt in exchange for more common stock in the nation's seventh-largest airline. That would lift the two groups' combined equity to 70 percent from 55 percent.
But the groups want the restructuring handled via a Chapter 11 filing in the Bankruptcy Court. Such a "prepackaged" filing is popular with some creditors because it is a relatively quick way to get the legal system's stamp of approval on a plan that has already been approved by the parties involved.
St. Louis-based TWA, anxious to get the restructuring behind it, is willing to file the prepackaged plan in the hope that it could emerge from Chapter 11 within two months. The filing could come any day.
TWA sees no other options. "The other alternative without the restructuring is that the company would no longer exist," TWA Chief Executive Jeffrey Erickson said earlier this week at a special meeting of TWA's stockholders, who also endorsed the plan.