Hopes dimmed Tuesday for a merger of Trans World Airlines and Pan American World Airways, as TWA Chairman Carl C. Icahn bitterly denounced his counterpart at Pan Am for repeatedly undermining Icahn's quest to combine the nation's premier transatlantic carriers.
Revealing that the airlines have held on-again, off-again merger talks since mid-October, Icahn said in a letter to Pan Am Chairman Thomas G. Plaskett that Pan Am's efforts to sell pieces of its operations to other carriers demonstrated "lack of a good faith interest in negotiating the merger of our airlines."
The letter, released Tuesday by TWA, was prompted by a published report Monday indicating that Northwest Airlines had arranged financing for a $150-million purchase of Pan Am's Boston-New York-Washington shuttle.
Neither airline has confirmed the existence of such a deal, in which the financing arm of an Oregon utility would acquire the shuttle and Northwest would run it, with an option to buy the lucrative operation.
Plaskett had told Icahn in a letter Friday that a merger of Pan Am and TWA might prove "advantageous," if TWA would pony up the cash to tide struggling Pan Am through the slow winter months.
Yet Plaskett, according to Icahn's latest missive, canceled a meeting Monday at which the two men were to have discussed the financing of a TWA-Pan Am merger.
Likening the purported shuttle deal to Pan Am's sale of its London routes to United Airlines in October for $400 million, Icahn accused Plaskett of dumping valuable Pan Am assets for "less than market value."
Wrote Icahn: "It appears that you will go to any extremes to avoid the merger with us that you say in your letter would be advantageous."
He warned too that a sale of the shuttle could create legal entanglements if Pan Am subsequently falls into bankruptcy, as some analysts expect.
"I assume that, once again, entrenchment of existing management will be the principal purpose of the transaction," Icahn fumed, "rather than something that might ultimately benefit your shareholders, employees and creditors, as well as the traveling public."
Spokesman Jeffrey Kriendler said Tuesday that Pan Am was still waiting to make "a credible proposal" for buying the airline
Securities analysts have questioned whether Icahn has been serious about acquiring Pan Am. Even if he is, there are doubts that TWA has the wherewithal to accomplish a merger. Together, the airlines carry $3.6 billion in debt, and neither has a strong domestic operation to feed its overseas routes.
Yet because many of Pan Am's and TWA's transatlantic routes overlap, a merged airline could raise a tidy sum by selling off the duplicates. Some analysts speculate that Icahn--considered more a deal maker than a manager--might then sell the slimmed-down combination, perhaps in some measure to a foreign carrier, if overseas airlines are granted more freedom to buy American airlines.
In his letter, Icahn told Plaskett that a merger "might well be your airline's only hope of survival." But some analysts say Pan Am could hang on as a much smaller independent force if it continues its asset-selling spree.
Times staff writer Robert E. Dallos in New York contributed to this story.