Karabu Agreement

“There wasn`t $190 million. There was not $190 million. TWA had two options: accept or conclude the agreement,” says Mark Abels, who was vice president of corporate communications from 1996 to 2001. By agreement of August 14, 1995, Lowestfare.com LLC, a wholly owned subsidiary of Karabu, joined the ticketing program agreement as a contracting party. Under the ticketing program agreement, Lowestfare.com could purchase an unlimited number of system tickets. System tickets are tickets for all applicable service classes that Karabu purchased from TWA with a 45% discount on the published TWA fare. In addition to system tickets, Lowestfare.com could also purchase national consolidator tickets, which are discounted tickets limited to certain markets in the hometown/destination, and did not allow the holder to modify or refund a purchased ticket. Karabus bought inside consolidator tickets was submitted with a cap of $70 million per year based on the total ticket sales price. The court also rejected a request to maintain the so-called “Karabu” agreement, which allows the financier and former owner of TWA, Carl Icahn, to purchase and resell TWA tickets at a discounted price. Under Icahn`s control, some of the airline`s most valuable assets, including routes to London, were divested, contributing to the airline`s problems.

While he was expelled from the airline, it ultimately did not help save the airline. In fact, the Karabu agreement, with which it was withdrawn, was another factor in the airline`s decline. TWA has international codeshare agreements with Royal Jordanian Airlines, Kuwait Airways, Royal Air Maroc, Air Europa and Air Malta. In 1997, a code-sharing agreement was signed with Air Ukraine, which is expected to begin operating between Paris and Kiev until 1999. Domestic code actions with America West Airlines were launched and long-term merger plans were reviewed. Unfortunately, for TWA, the themes they had followed since 1978 came into the new millennium. A unique node in St. Louis and a small international presence have significantly hindered their choice of route. The new plans, which they were so proud of, were purchased with excruciating credit terms, which quickly affected the airline`s debt, and of course, Karabu`s agreement with Icahn emptied its funds because it was competing with discounted tickets. By the end of 2000, it was clear that the company could not survive, and on January 9, 2001, it was learned that American TWA would be buying in the largest airline merger in history. In 1992, TWA went bankrupt and in 1993, 55% of the creditors came from its creditors.

One of those $190 million was Icahn. He resigned as president in 1993 and in 1995 became increasingly impatient to be reimbursed. TWA executives, desperately trying to conclude Icahn`s tragic chapter, gave the farm, the cows and the peasant. They arrived with an agreement called Karabu Ticket Agreement, an eight-year agreement that allows Icahn to buy any ticket connected by St. Louis (but not those that were created or finished here, so St. Louisans never had access to the cheap tickets) for 55 cents on the dollar and sell them at a discount. Much to Icahn`s disappointment, the judge did not agree to uphold the Karabu Agreement – which contributed to TWA`s downfall and was expected to last until September 2003. In 1993, Icahn resigned as president, but signed a contract called the Karabu Ticket Agreement, which allows him to buy every ticket bound by St.

Louis for 55 cents on the dollar and resell it with a discount. The agreement prevented him from selling tickets through travel agencies, but he created Lowestfare.com and committed murder. Karabu was not invalidated; AA simply decided not to buy it. That is the whole reason why the transaction went the way it did; The Karabu agreement – which would not expire until September 2003 – provided that if another developer merged or purchased with TW, the agreement with twitling would come and be on the verge of complying with its terms.