Advertisement

TWA Owner Is Said Pondering Eastern Buyout : Airlines: Carl C. Icahn is reportedly talking with creditors of the bankrupt company, but an offer has not yet been made.

April 05, 1990|From Associated Press

NEW YORK — As the unsecured creditors for Eastern Airlines step up pressure to sell the carrier, Trans World Airlines owner Carl C. Icahn has resurfaced as a possible buyer, sources said Wednesday.

Icahn and his associates held informal discussions recently with representatives of Goldman, Sachs & Co., financial advisers to the committee of Eastern's unsecured creditors, said the sources, who spoke on condition they not be identified. The talks have been preliminary, and the notion of an Icahn bid for Eastern has not yet "ripened," one of them said.

Eastern spokesman Robin Matell declined comment on the matter. Icahn's office said he was unavailable for comment, and aides at Goldman Sachs did not immediately return phone calls.

Goldman Sachs reportedly told the committee recently that TWA is not interested in bidding for Eastern, but a source close to the airline company said there is some interest.

The creditors' committee, exasperated by Eastern's mounting losses, voted Tuesday to reject the airline's latest reorganization proposal and to seek the appointment of a special trustee to sell Eastern. The creditors have been soliciting possible buyers behind the scenes in recent weeks, sources say.

Icahn, a corporate investor who took TWA private in October, 1988, appears to have emerged as the predominant potential buyer, the sources said. They suggested he might bid for Eastern in concert with other investors.

Icahn's interest in Miami-based Eastern goes back at least to September, 1988, when members of Eastern's machinists union met with him about a possible bid. After Eastern's filing for bankruptcy protection on March 9, 1989, and the subsequent collapse of an attempted buyout led by ex-baseball Commissioner Peter V. Ueberroth, Icahn was the unions' favorite to buy the strike-plagued airline.

Machinists, pilots and flight attendants struck Eastern on March 4, 1989.

Icahn was TWA's white knight in 1986, buying the airline in a $440-million deal to thwart an attempted takeover by Frank Lorenzo, chairman of Eastern's parent Texas Air Corp.

Industry analysts have noted a potential compatibility between Eastern, which operates mainly between the Northeast, Florida and Atlanta, and TWA, which is strongest in transatlantic operations.

But Icahn backed off from Eastern last May. TWA said it needed more time to discuss with its unions the feasibility of integrating the TWA and Eastern work forces and was not prepared to submit a formal bid at that time.

Eastern, battered by the strike, continues to report losses and is having difficulty attracting passengers. The rebuilt airline has sold more than $800 million in assets with the approval of a U.S. bankruptcy court and would now be valued at far less than the $464 million offered by the Ueberroth group.

TWA has problems of its own. It recently reported a net loss of $298.5 million in 1989.

Advertisement
Los Angeles Times Articles
|
|
|