The employees took issue with a statement by AMR Corporation--parent of American Airlines--that daily TWA service to Tel Aviv "does not make economic sense."

In a press release, the TWA Workers Committee at Ben Gurion Airport challenged this assumption, saying the route between New York and Tel Aviv earned a $10 million profit in 1999--an amount which, they said, is "certainly more profitable than flights to Egypt and Saudi Arabia, which will not be 'suspended' or canceled." Profits in 2000 were $8.5 million, reflecting a slowdown in tourism resulting from ongoing violence between Israelis and Palestinians.

A travel industry source said TWA still is accepting reservations for flights to Israel. The source said TWA reservation clerks in the United States report that they too have heard "a rumor" about the flights being shut down in the future. They stressed that if the rumor proves true, anyone who books a TWA flight will be "protected" with a ticket on another airline.

The Tel Aviv-based employees, who number approximately 100, questioned on March 5 whether American Airlines is suspending the flight for political rather than financial reasons. "Does American airlines believe that continuing service to Israel will adversely affect its business relationship with other Middle Eastern countries?"

American Airlines issued a response on March 8 which confirmed the planned suspension, and added: "Recent speculation from some parties has suggested that TWA's Tel Aviv flight has been profitable for the last two years. Although American has not yet seen TWA's detailed financial information about this flight, TWA has informed the company that its service to Tel Aviv has lost money in each of the past two years. Although many of TWA's flights to and from Tel Aviv have-until recently-operated at above average load factors, the unusually high cost structure and low fares associated with this flight made it unprofitable.

"In addition, American reviewed Israeli employment law and TWA's severance obligations to its employees," the written response added. "If American began operating TWA's service to Tel Aviv, but later had to discontinue it for financial reasons, American might be expected to take on TWA's obligations to pay severance to its employees, which could total as much as $9 million to $18 million. Combined with the other market factors, this presented an unacceptable risk for the airline."

American noted that it has a "reciprocal frequent flyer agreement with El Al, which flies to Tel Aviv six times per week from JFK and offers other direct flights between Israel and the United States. In addition, American is currently awaiting approval from the Department of Transportation for a codeshare agreement with Swissair that would allow service to Tel Aviv through Swissair's hub in Zurich."

The airline said TWA's routes to Cairo and Riyadh have been profitable, and that "the negative economic factors existing in Tel Aviv do not apply in either Cairo or Riyadh."

In a telephone interview from Fort Worth, Tex., American Airline spokesman Al Becker said the decision "has nothing to do with the politics of the region, and everything to do with economics."

In a bid submitted Feb. 28 to U.S. Bankruptcy Court, American offered $500 million cash, plus the assumption of all of TWA's facility and aircraft leases. The airline reported that on March 7 it "increased its bid by $125 million in cash and $117 million in aircraft security deposits, pre-paid rents and other payments that TWA has made that American would return to TWA.

The bankruptcy court approved American's bid, but it is subject to appeal.

--Donald H. Harrison