Icahn Defends His Management Practices As He Leaves Twa

NEW YORK - Seven years after taking control of Trans World Airlines, Carl C. Icahn resigned Friday as its chairman and officially turned over management of the company to two executives chosen by creditors and employees.

Icahn, 56, also surrendered his stock in TWA as part of an agreement to sell the airline to creditors and employees and settle his liability for its underfunded pensions.

Icahn had largely turned over day-to-day responsibility for the airline in recent months to Robin Wilson and Glenn Zander. Wilson was recruited and appointed by the company's labor unions. Zander was chosen by creditors.

Leaders of TWA's Machinists union have been talking with retired Chrysler chairman Lee Iacocca about taking over the top spot, at least on a part-time basis, but no decision is expected for weeks or months. Union and creditor representatives have said Wilson and Zander are also candidates to stay on in the top jobs.

"During my tenure, a troubled airline industry has put a number of major carriers out of business, all of which were in better shape than TWA was in 1986," Icahn said in a statement.

Icahn said the reorganized TWA would be in a stronger position to compete with the largest airlines because of its dramatically lower cost structure.

"Our divorce from Carl Icahn is final," Bill Compton, chief negotiator for the TWA branch of Air Line Pilots Association, said in a statement.

As part of the deal that set up Icahn's resignation, he agreed to lend TWA $200 million and contribute millions to its pension funds in coming years. The Pension Benefit Guaranty Corp., the federal agency that backs worker pensions, estimated there was a $1.2 billion shortfall in TWA's retirement funds and threatened to sue Icahn for the balance if he didn't agree to a settlement.

A Bankruptcy Court judge approved the agreement last month.

TWA plans to seek the judge's approval of its reorganization plan, which gives 55 percent of the carrier to creditors and 45 percent to employees, at a hearing next month. The airline had been scheduled to present the plan to the court in Wilmington, Del., next Tuesday, but has asked for an extension.

Icahn's resignation removes him from the only big-name company the takeover strategist ever actually bought. Icahn made a name for himself in the 1980s for threatening to take over a company, then forcing management to make concessions. He often sold his stock in the companies at a handsome profit.

When TWA filed for bankruptcy court protection last January, Icahn admitted the TWA purchase was one of his worst investments.