DALLAS (AP) -- American Airlines agreed Wednesday to acquire most of Trans World Airlines' assets for about $500 million in a complex deal that will bring an end to the financially troubled TWA, 75 years after it became a pioneer in passenger aviation.
The agreement, along with a separate pact under which American would buy some US Airways' assets from United Airlines, would place American and United in control of about half of the nation's air-travel market.
As part of the deal, TWA filed for Chapter 11 bankruptcy protection and will sell most of its assets to American, a subsidiary of AMR Corp., for $500 million in cash.
American also will assume responsibility for TWA's aircraft leases and provide an additional $200 million in immediate financing for the St. Louis-based airline.
In a concurrent move, American is acquiring some US Airways assets for $1.2 billion in cash and the assumption of $300 million in aircraft leases. It will also pay $82 million for 49 percent of startup DC Air, which will fly out of Reagan National Airport in Washington.
The latter portions of the deal are contingent on federal regulators approving United parent UAL Corp.'s $4.3 billion proposal to purchase US Airways. Antitrust regulators have pressed United, the world's largest carrier, to sell off some of its operations before they approve its purchase of US Airways, the nation's No. 6 carrier.
If everything is approved, Chicago-based United and American, the nation's No. 2 carrier, would stand head and shoulders above the rest of the U.S. airline industry, each with roughly 25 percent of the domestic market. No. 3 Delta has 15 percent.
Even before the agreements were announced, some consumer advocates warned that approval of the deals would mean fewer choices, worse service and higher fares for travelers.
''If they all go through, it'll mean the end of the era of competition among airlines,'' said Paul Hudson, executive director of the nonprofit Aviation Consumer Action Project.
In addition, having 51 percent of seats in the hands of two carriers makes the country more vulnerable to the labor troubles that have occurred regularly in aviation, said Ed Perkins, consumer advocate for the American Society of Travel Agents.
American chairman and chief executive Donald J. Carty said at a news conference in New York that the deal gives American ''a level of growth that otherwise take us years to achieve.''
American would add TWA's hub in St. Louis to its hubs in Dallas-Fort Worth and Chicago and greatly increase its presence in busy East Coast cities including New York and Washington.
''The agreement will protect air service in St. Louis and maintain St. Louis' role as a major transportation center,'' TWA said in a statement. ''The agreement also calls for American to offer employment to almost all of TWA's 20,000 employees.''
The deal would bring an end to TWA, which traces its roots to the 1925 founding of Western Air Express. It catered to popes and movie stars, once ruled the sky around the world with Pan Am, and held that world in rapt attention during a 1985 hijacking and the 1996 crash of a flight from New York to Paris.
The nation's eighth-largest carrier has failed to turn a profit since 1988 and has filed for bankruptcy twice before.
It might have finally made money if fuel prices had not almost doubled last year. Instead, TWA lost $115.1 million through the first three quarters of 2000. In 1999, the carrier's $353 million loss made it the only major airline not to show a profit.
TWA's decision to seek a white knight came after the airline started the fourth quarter with just $157 million in cash. Carty acknowledged that another company could bid for TWA, but said there was a $75 million breakup fee as part of the agreement between TWA and American.
American could face labor trouble digesting the large acquisitions. Pilots held a costly sickout to protest the carrier's purchase of much-smaller Reno Air in 1998.
The airline must integrate TWA and US Airways pilots on American's seniority list, which can threaten the carrier's current pilots. Seniority determines pilots' schedules and whether they fly as captain, co-captain or navigator.
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