AMR Corp unit American Airlines plans to buy its financially troubled competitor Trans World Airlines, The Washington Post reported.
If the deal, expected to be announced Wednesday, is approved, American will emerge as the largest US airline and TWA would cease to exist, the newspaper said.
As part of the deal, TWA would file for Chapter 11 bankruptcy protection from its creditors, while American would buy all its assets and preserve the jobs of its 20,000 employees, the Post said citing unnamed industry sources.
The acquisition would give American a third mid-continent hub in St Louis, along with Chicago O'Hare International Airport and Dallas-Fort Worth International Airport, where it has run out of room to expand, the report said.
TWA's costs are unusually high because the airline, which has already been in bankruptcy twice, has no credit, and its aircraft lease fees to Boeing Corp are steep, according to analysts quoted by the daily.
But as part of the bankruptcy filing, the lease agreements would be renegotiated, the report said.
American has reached an agreement to buy 49 per cent of DC Air, the airline being created by Black Entertainment Television founder Robert Johnson, according to the Post.
AFP