NY Times, March 12, 2001 Judge Approves American's Purchase of TWA By THE ASSOCIATED PRESS Filed at 1:11 p.m. ET WILMINGTON, Del. (AP) -- A federal judge on Monday said he is going to accept the $742 million bid by AMR Corp.'s American Airlines for the assets of bankrupt Trans World Airlines Inc., pleasing TWA workers who feared their company might be acquired again by billionaire financier Carl Icahn. U.S. Bankruptcy Judge Peter Walsh said he will approve the bid in part because he feared TWA would be forced to liquidate its assets if the deal with American did not go through. ``I think it is in the best interests of the estate for that not to happen,'' Walsh said. The purchase still must be approved by the U.S. Justice Department, which is conducting an expedited review. American has said it expects to offer jobs to most of TWA 20,000 workers, and TWA's unions are expected to approve the deal. As a result, TWA's name will eventually disappear as the company and its employees are folded into American, said American spokesman John Hotard. ``We want everyone to be part of one big family,'' Hotard said. ``You're better off from an employees' standpoint and marketing standpoint to have everyone under a single name.'' === The New York Times, September 5, 1993 CRANDALL HAD PUT ALL the pieces in place to expand American Airlines in the early 1980's -- except one. He still needed a strategy to lower labor costs, which consumed more than 38 cents out of every dollar of revenue. Crandall had a serious cost problem. Like the other major airlines, American was a high-cost carrier. The meal service, the baggage handling, the ticketing, the thousands of employees who were paid high union wages with restrictive work rules all represented enormous costs embedded in American's system. For four decades, the Federal Government had regulated fares and routes. The Civil Aeronautics Board had built a rate of return into fares based on actual industry operating costs, whichmeant that carriers had little incentive to operate efficiently by holding down expenses for labor and other items. Costs ballooned over the years. When deregulation arrived in 1978, the airlines were free to add routes where they wanted and to price their services as they wished. But such freedom also had its price. Deregulation brought new carriers like People Express into the market -- carriers that enjoyed much lower costs because they started from scratch with nonunion workers. Fast growth could enable American to achieve the kind of size and market dominance that could give it competitive advantage. But Crandall understood that American could not afford to grow unless it reduced its operating costs. Crandall's solution was to sign a deal with the major unions in 1983 that established a two-tier wage structure. It protected the salaries of current employees while allowing American to make new hires at lower wages. That meant subsequent growth would be achieved with low-cost labor. The faster American grew, the faster its average unit costs would go down. Louis Proyect Marxism mailing list: http://www.marxmail.org
