Trans World Airlines Inc. has offered to buy Pan Am Corp. if Pan Am's deal to sell key New York-to-London routes to United Airlines' parent falls through.
TWA chairman Carl Icahn said late Sunday he had proposed offering about $150 million in cash plus securities with a face value of $300 million for struggling Pan Am.Icahn said in a telephone interview that Pan Am Chairman Thomas Plaskett had asked him to make an offer in case Pan Am's talks with UAL Corp. fail. Pan Am has proposed selling UAL important routes between New York and London as part of a $400 million deal.
Although TWA is considered healthier than Pan Am, both have been hurt by rising fuel prices since Iraq's Aug. 2 invasion of Kuwait and fewer passengers since the economy started weakening.
If TWA buys Pan Am, duplicated routes like those to London's Heathrow airport would be sold, Pan Am said. TWA and Pan Am are the only two U.S. airlines flying into Heath-row.
Icahn's proposal, contained in a letter delivered to Plaskett late Friday, proposed Pan Am shareholders receive $1 per share in cash and securities with a face value of $2 per share. The securities, either preferred stock or promissory notes, could bring different market prices.
Pan Am's stock closed at $1.621/2 Friday on the New York Stock Exchange.
Pan Am said in a statement it was still working on the route sale to United, but the deal could be called off if not completed by Wednesday.
Icahn's letter also proposed buying the Pan Am Shuttle, which flies between Boston, New York and Washington, by the end of the year. TWA's proposal to buy the rest of the company is open through Friday.