he Civil Aeronautics Board yesterday set the stage for increased competition between two airlines - not for passengers but on Wall Street for the stock of National Airlines.
The agency yesterday granted pan American World Airways the same temporary authority given Texas International Airlines: to purchase up to 25 percent of National's stock.
However, both will purchase additional stock with the knowledge that the CAB could force them later to divest it.
Texas International, a regional, federally regulated airline serving nine southern and western states, launched a takeover attempt last month when it announced it had purchased 9.2 percent of National's stock on the open market for an average price of just over $18 a share. Since then, it has acquired at least 11.9 percent of National's stock.
Pan Am, which jumped in last week with an offer to pay National shareholders $35 for each share, announced that it already had acquired a 4.8 percent share.
Although National has been hostile to Texas International's takeover bid, it said it would consider Pan Am's offer.
Both TXI and Pan Am asked the CAB for permission to increase their holdings in National to 25 percent while the CAB considers their applications for board approval of their respective merger plans.
Although the board granted them both temporary authority to acquire additional stock so long as it is put into a trust that prevents the exercise of voting control of National, it also asked for public comment on the proposed trust arrangements.
If the CAB decides after studying the comments that the arrangements do not adequately insulate the two acquriing airlines from control of National during consideration of the merger applications, it can order the trusts dissolved and the stock sold.
During that period, the board also is going to determine whether TXI's acquisition of National stock before seeking board approval violated the Federal Aviation Act. The FAA requires board approval before an airline is acquired or controlled by another airline.
Although the law includes a presumption that an air carrier is controlled by any person having beneficial ownership of 10 percent or more of the voting securities, some board lawyers point out that a smaller share of a company also can constitute control.
On Wall Street yesterday, both Pan Am and National Airlines were among the 15 most active stocks in New York Stock Exchange composite trading. National Airlines closed at 38, up 2, while Pan Am closed at 8-3/8, off 1/8. In consolidated American Stock Exchange trading, TXI was off 3/8 to 15 1/4.
The CAB has assigned the TXI-National acquisition case and a proposed merger between North Central Airlines and Southern Airways to separate administrative law judges for hearings and told them to have their initial decisions in by Jan. 2. The board said it hoped to make its decisions by March 1. Other than the trust questions, the board hasn't taken any action on Pan Am's application for approval of its proposed merger with National.