ALGIERS, Algeria -- Armed Arab terrorists who hijacked a TWA jet over Greece with 153 people aboard -- most of them Americans - released 40 passengers during a terror-filled odyssey Friday and then took off for Beirut, airport sources said.
It was the third hijacking in the Middle East in three days.
The Boeing 727 left Algiers airport at 8.25 p.m. (3:25 p.m. EDT) after 21 of the passengers -- men, women and children -- were allowed to leave the plane in Algiers, the airport sources said. Nineteen were released at an earlier stop in Beirut.
The plane, with 113 passengers and crew remaining on board took off from Algiers about five hours after landing. Air traffic controllers in France and Italy said it was heading back to Beirut.
During tense negotiations with Algerian authorities, the hijackers - armed with submachine guns and hand grenades -- threatened to 'execute' their hostages if their demand for the release of Shiite Moslem prisoners in Israeli jails was not met.
Witnesses in Algiers said two airport buses that had earlier approached the aircraft, a mile from the air terminal at the end of a runway, returned to the airport's VIP lounge just before 8 p.m. with 21 passengers.
Within a half-hour, the aircraft taxied onto one of Houari Boumidienne International Airport's two runways and took off five hours after it had landed in Algiers.
One passenger was reported shot and wounded during the hijacking.
The Boeing 727, seized minutes after it departed from the Athens airport for Rome, was first forced to land at Beirut International airport where 19 passengers -- 17 women and two children -- were freed in exchange for fuel, TWA officials said.
The plane was then forced to the Algerian capital of Algiers, where it landed with 134 people aboard, including eight crew members.
The airline said 104 of the people aboard were American. Among the original passengers, 34 were part of a Catholic group from Rockford, Ill., returning from a tour of the Middle East, the State Department said.
The hijackers, believed to number from two to four and to be armed with grenades and Soviet AK-47 submachine guns, issued a list of demands in negotiations conducted with Algerian authorities.
They insisted on a public condmenation of U.S. foreign policy, particularly Washington's financial support of Israel.
The gunmen also demanded that Israel release fundamentalist Moslems detained in its prisons and called for a public denunciation of a bombing attack in Beirut on March 8 that killed 85 people. Moslem fundamentalists claimed the bomb attack was aimed at a Shiite leader and was masterminded by Israel and the CIA.
'If the demands are not met, the hijackers threaten to execute the hostages,' the official Algerian news agency APS said.
The pro-Iranian Islamic Jihad terrorist organization, responsible for several kidnappings of westerners in Beirut, claimed responsibility for the third hijacking in the Middle East in as many days.
Minutes after the hijacked plane left Beirut, a person telephoned a Western news agency saying the plane was hijacked by the Islamic Jihad to 'prove to America that we can hit you anywhere we want.'
In Washington, President Reagan was awakened early Friday and told of the crisis.
'We're doing everything we can do' to assure the passengers' safety, he told reporters following a Rose Garden ceremony.
Asked whether there had been any contacts with Iran, he said, 'I can't talk about that.'
The State Department called for the 'immediate safe release of the passengers,' but spokesman Bernard Kalb added, 'It is not our policy to give in to terrorist demands.'
U.S. Ambassador to Algeria Michael Newlin was at the Algiers airport keeping in touch with the situation, Kalb said. He said the State Department was 'in touch with the appropriate governments.'
Many of the passengers on the hijacked plane was destined for the United States. At Rome, U.S.-bound passengers were to board a Boeing 747 jumbo jet to continue on to Boston, Los Angeles and San Diego.
Passengers freed in Beirut were flown to Cyprus. They told reporters that two men sitting in the back of the Trans World Airlines plane ran from their seats about 15 minutes into the flight, entered the cockpit and seized control.
'They told us to put our hands up behind our heads and put our heads down,' said Irma Trautman of Laredo, Texas. 'When we got to Beirut, my daughter and I were told to move to the front of the plane. Someone opened the door and they told us to jump and get off.'
Other passengers said some people aboard were beaten. Trautman said one man was shot in the neck and wounded. Many of those freed said they still had relatives on board.
Controllers at the Beirut airport repeatedly refused landing permission for TWA Flight 847 -- to no avail.
The pilot radioed that one hijacker was brandishing a hand grenade with the pin pulled and threatening to kill everyone aboard.
'You have no permission to land at Beirut,' an air traffic controller radioed Flight 845 while it was still over the Mediterranean.
'Beirut, the hijacker has pulled the pin on his hand grenade. We will land in Beirut! He is desperate. He has pulled a hand grenade pin and he is ready to blow up the aircraft! We must -- I repeat must -- land at Beirut. No alternative,' the pilot radioed back.
During a tense 90 minutes on the ground at Beirut airport, the hijackers -- pressing demands for fuel -- beat up passengers, threatened to kill them and to blow up the aircraft.