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TWA Chops Fares In Response To American’s Price Program

April 12, 1992

NEW YORK (AP) _ Trans World Airlines, one of the nation’s weakest carriers, said Sunday it would cut many ticket prices an additional 10 to 20 percent in response to a price program announced last week by American Airlines.

TWA didn’t say it was matching the new price structure as had many other carriers, but said its new fares would keep its ticket prices up to 40 percent lower than its competitors on some coast-to-coast flights and for travelers who agree to fly through its St. Louis hub.

It will begin advertising the fares in newspapers on Monday.

TWA’s new one-way fare from New York to Los Angeles would be $350, compared with a fare under American’s new price program of $460, down from its old price of $752.

TWA currently is trying to fight its way out of bankruptcy court, where it sought protection from creditors early this year amid mounting losses. The impact of the Gulf War and the recession combined to cost the airline industry $6 billion in 1990 and 1991.

Analysts have said American’s plan to lower fares as much as 50 percent in some cases could drive carriers like TWA out of business.

But TWA Chairman Carl Icahn told reporters in a telephone conference that the cuts will have a limited impact because TWA already has cut costs and is recovering. He said the airline expects to get into the black in May.

TWA declared assets of $2.68 billion and liabilities of $3.47 billion when it sought bankruptcy protection.

″If the reason for doing this fare is to try to get rid of a low-cost competitor, it’s not going to work,″ Icahn said.

Wilbur Ross, a Rothschild Inc. executive who represents bondholders owed money by TWA, said the creditors wouldn’t oppose the new fare cuts.

″My own sense of things is that he can probably afford this immediate round of cuts. But I truly wonder if anyone can afford much more,″ Ross said.

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