The battle for control of National Airlines opened on two fronts yesterday - Wall Street and the Civil Aeronautics Board.
On Wall Street, the price of National's stock soared 6 1/2 to 36 1/4 on the New York Stock Exchange during the first day of trading following Wednesday's announcement that Pan American World Airways has proposed a merger with National. The announcement put Pan Am in competition with maverick Texas International Airlines which already acquired an 11.9 percent share of National in a separate takeover bid.
Opening trading was delayed but when it began, 55,000 shares changed hands at a price of $34.25 up 3 7/8 from the last trade before Pan Am's proposal was made public. There was speculation that Texas Internaional may have been a heavy buyer but it could not be determined how much of a factor the company was in the demand for the stock. A TXI spokesman had "no coment" when asked whether the company had purchased additional stock yesterday.
Pan Am stock topped the Big Board's most-active list, rising 1/2 to 9 in consolidated trading, while Texas International rose 1 5/8 to 15 1/4 in consolidated American Stock Exchange trading.
At the Civil Aeronautics Board, Pan Am filed a formal application seeking approval for its proposed merger, and also asked the board for permission to acquire up to 25 percent of National's stock. Pan Am proposed putting the additional purchases - it had already acquired a 4.8 percent share - in a trust arrangement identical to one the board tentatively approved to TXI.
In its bid to acquire National, Pan Am said it would offer $35 for each share of National stock.
However, National, which said Wednesday it could consider the Pan Am proposal, asked the CAB to consider its decision to let TXI, or any other company, buy more than 10 percent of its shares, a limit it contends is supported by the Federal laws. "A halt in further illegal purchases of National stock is necessary to allow National's board to fulfill its responsibility of examining the Pan Am offer . . . free from the pressures of a stock market raffle," National Chairman L.B. Maytag said.
"The Federal Aviation Act was designed to prevent the kind of ill-considered stock buying dogfight that this situation could very well turn into," he said.
National is expected to challenge in the Court of Appeals any final CAB decision allowing TXI and possibly Pan Am to purchase more than 10 percent of its stock, whether its put in a trust or not.
In an appearance on Capitol Hill yesterday, William T. Seawell, Pan Am's Chairman and Chief Executive Officer, said he was "optimistic about Pan Am's chances to win the battle for National Airliners.
"Assuming success, and we don't assume that in our company, hopefully there will be a happy tripartite ending" to the current saga, he told the Senate Aviation Subcommittee during hearings on international aviation policy. "Francisco Lorenzo (TXI's president), whom I admire rather extravagantly, would be extravagantly wealthy," Sea well said. "It would put him in a position to gobble up United Airlines."
If TXI loses in its bid for National but Pan Am wins, the Texas-based carriers which serves nine western and southern states, would still profit handsomely for its venture so far. It had secured almost 800,000 shares of National for about $18 a share, and at least 225,000 more at a higher price, which it could sell to Pan Am for $35, and possibly higher, if Pan Am ups the bid later.
Testifying on a bill designed to increase competition in international aviation, Seawell said acquisition of profitable domestic air routes is needed to "place us on equal footing with other domestic and foreign carriers.
"If you are a U.S.-flag airline that possesses a domestic system, you have a cushion against the effects of inequitable market access and discriminatory treatment abroad," he said. "You also have a broader base and higher frequency of service over which to spread your costs and the means of deploying expensive aircraft more efficiently."
He said Pan Am's position had become "bizarre." Recent U.S. government route awards had made it "clear" to him that no new intenational routes would be given Pan Am but would go to regional carries with domestic routes feeding traffic into international ones, he said. "I'm seeking to put myself in that position."
He see the National merger as a way to get domestic routes quickly, he told reporters after the hearing, "With this rapidly changing environment I don't have time to build a domestic system, one route at a time."