PHOENIX—Once hailed by some as the man who saved TWA, and yet chided by others with opposite views, Carl Icahn has enjoyed a rebirth of sorts as a Web entrepreneur. For the past five years, Icahn has been selling discount TWA fares through Lowestfare.com, the Web travel firm he founded and serves as chairman. In a dot-com world riddled with high burn rates and mounting failures, LowestFare.com has managed to turn a profit—thanks to a litigious multi-year ticket agreement with TWA.
Icahn has been controversial long before stirring up the Web travel niche. He continues to challenge various boards in the quest for unlocking shareholder wealth. Which is why Icahn’s special address at The PhoCusWright Executive Conference in Phoenix, Ariz., Nov. 14-15 will be one to experience.
There will be about 900 delegates attending the PhoCusWright conference, representing 27 countries from several hundred companies. There are 17 airlines sending 55 delegates. Major sponsors include America Online, MasterCard, IBM, Ziff Davis Media, DoubleClick and Yahoo!.
Icahn is, after all, a man whose words have already been immortalized by Hollywood. It’s been said that parts of a famous speech Icahn once made to TWA stockholders were placed in the mouth of Gordon Gekko from Oliver Stone’s 1987 film, “Wall Street.”
In 1985, when TWA was facing a hostile takeover, Icahn began buying shares in the airline, eventually controlling the company and taking it private. Icahn left, but in the early 90s, an Icahn-controlled company, Karabu, loaned TWA $190 million to help pay the airline’s debt. When the loan became due, TWA and Icahn negotiated an eight-year agreement that gave Karabu the right to purchase discount tickets from TWA, for all seats and fare classes.
According to documents filed with the U.S. Securities and Exchange Commission, the agreement allowed Karabu to buy consolidator tickets at a 40% discount, but no more than $70 million worth per year. However, Karabu could also buy an unlimited number of TWA system tickets at a 55% discount. The multi-year deal applied to all flights operated by TWA other than travel originating or ending in St. Louis, where TWA is based. Karabu could not sell the tickets to consolidators or tour operators, and could not use TWA’s name in any advertising.
Icahn first began selling the tickets through a toll-free service, Global Discount Travel. Then the Web came exploded. Launched in 1996 and aimed at leisure and small business travelers, LowestFare.com has completed more than two million transactions and will see its gross bookings grow to an estimated $250 million in 2000.