A federal judge in Seattle yesterday barred Alaska Airlines and its former subsidiary from buying more stock in Wien Air Alaska, its major Alaskan competitor.
U.S. District Court Judge Donald S. Voorhees issued an injunction ordering Alaska Airlines and the subsidiary, Alaska Northwest Properties Inc. (ANPI), to comply with a Civil Aeronautics Board order either to apply to the board for approval of their attempt to take over Wien or to sell enough stock to bring their holdings in Wien to less than 10 percent.
Under the Federal Aviation Act, a holding of 10 percent or more of an airline's shares by another airline presumes control, which requires CAB approval.
The board had ruled tentatively a month ago that Alaska and the subsidiary had violated the law in acquiring a significant stake in Wien without first seeking board approval.
Alaska and ANPI had contended that ANPI no longer had a connection with Alaska. Using that reasoning, ANPI and Alaska said ANPI was not an airline-related company and therefore wasn't subject to CAB jurisdiction.
It was a claim the CAB was wary of, pointing out that ANPI, while a subsidiary of Alaska, used general corporate funds from Alaska to purchase a significant stake in Wien. Also Alaska's chairman and chief executive officer, Ronald F. Cosgrave, resigned to assume the same positions in the subsidiary when it separated from the airline.
Judge Voorhees agreed with the CAB, ruling that there was a clear community of interest among management and stockholders of Alaska and ANPI and that the CAB did have jurisdiction.
He ordered Alaska and ANPI to decide within nine days whether to file an application with the CAB for approval of the Wien stock purchases or to get rid of enough stock to drop below the 10 percent limit. If the CAB application option is chosen, it must be filed within 30 days.
In the meantime, Judge Voorhees ordered Alaska and ANPI to avoid exercising any control over Wien or its directors, employes or shareholders.