Carl Icahn loaded TWA with $540M in debt — it filed for bankruptcy three times

Trans World Airlines was one of America's four great postwar carriers. In 1985 Carl Icahn acquired control and in 1988 took it private in a leveraged buyout that added $539.7 million in debt. To service the loans, TWA sold its most profitable assets — including its coveted London Heathrow routes — and entered a ticket-broker arrangement called the Karabu deal that stripped the airline of pricing control and cost it an estimated $150 million a year in revenue.

TWA filed for Chapter 11 bankruptcy in January 1992. Creditors forgave $1 billion in debt and employees accepted a 15% pay cut in exchange for 45% ownership. It emerged in 1993 only to file again in June 1995, this time carrying $1.8 billion in debt. A second restructuring wiped out $500 million more. The 1996 crash of TWA Flight 800 added further strain to an airline already flying on borrowed time.

The third and final bankruptcy came in January 2001. American Airlines acquired TWA's assets for roughly $745 million in cash and assumed liabilities. TWA's last flight landed on 1 December 2001. Its St. Louis hub, once the airline's heart, was downsized and eventually closed. An airline that had crossed the Atlantic since 1931 was gone — not because passengers stopped flying, but because the balance sheet could not carry the weight put on it.