Pam Am Awaits Icahn’s Next Move
NEW YORK (AP) _ Cash-strapped Pan Am said Friday it has had no word from TWA owner Carl Icahn on whether his takeover proposal still stands and whether the ouster of Pan Am Chairman Thomas Plaskett was a condition for the deal.
Officials at Trans World Airlines’ suburban Mount Kisco, N.Y., offices did not return several phone calls seeking confirmation that Plaskett’s removal was on a list of terms attached to a proposed merger of the two carriers.
That caveat was cited by unidentified sources quoted in Friday’s editions of the Wall Street Journal and the New York Times.
Pan Am spokeswoman Pamela Hanlon said that while the proposal to remove Plaskett ″has not been forthcoming from Mr. Icahn, Mr. Plaskett will do whatever is in the best interest of Pan Am and its shareholders.″ That presumably does not preclude stepping down from the executive suite.
The Journal said Icahn was understood to lack confidence in Plaskett’s management abilities. Plaskett, who once led an investor group on an abortive attempt to acquire Northwest Airlines’ parent NWA Inc., has been trying to sell off Pan Am assets to raise cash to keep the carrier alive.
The marriage maneuvering between TWA and Pan Am is the latest sign of how a declining U.S. economy and a sharp rise in jet fuel prices since the Persian Gulf crisis last August have severely hurt the airline industry, especially financially weak carriers such as TWA and Pan Am.
Both airlines pioneered overseas travel and were once leading international competitors but are now scrambling to retrench and shrink - to the benefit of healthier airlines. Pan Am already has sold some of its most attractive European routes to United Airlines, while TWA has done the same in a deal with American Airlines.
Icahn earlier this month suggested he would be willing to acquire Pan Am for $225 million in cash and $150 million in debt securities. But he has yet to present Pan Am with a formal proposal.
Apparently there was some confusion over when exactly Icahn would unveil his merger plan to Pan Am. Bickering erupted after Icahn claimed Pan Am canceled a meeting last Monday; Pan Am countered that no meeting had been scheduled.
Part of Icahn’s proposal is understood to require Pan Am to seek Chapter 11 protection from creditors in order to receive a large loan to carry it until the merger with TWA is consummated.
Pan Am disagrees with that approach. ″The company is opposed to entering into an agreement with Mr. Icahn that has as a condition the company filing Chapter 11,″ Hanlon said.
The newspaper reports said Icahn would replace Plaskett with Pan Am’s chief financial officer, Richard Francis, who has been negotiating with the TWA chief. The carrier’s general counsel, Roger Cooke, also would be retained, the published accounts said.
Plaskett is not believed to have been directly involved in the talks with the Icahn team.
While acquirers often replace managers once a deal is completed, it’s less typical for personnel issues to surface so early in negotiations.