Trans World Airlines Inc. yesterday asked the Department of Transportation to block financier Carl C. Icahn from attempting to take over the company.
TWA charged that Icahn was purchasing TWA stock just to turn a quick profit, suggested that he might not comply with federal laws governing air carriers, and said he was not qualified to run an airline.
"This lack of knowledge, coupled with Icahn's poor compliance history and consistent pattern of investing in companies solely to turn a quick dollar, demonstrates that he is unfit to be entrusted with the control of a large air carrier like TWA," the airline charged in a filing with the department.
"Icahn and his associates have no experience operating an airline and have no managerial competence or experience in operating an ongoing enterprise, other than in the field of securities investing. In this regard Icahn also is unfit," TWA said. "Icahn has no sound financial plan to manage TWA and, in this regard too, an Icahn-dominated TWA would be unfit."
Icahn, who heads an investor group that owns 23 percent of TWA, could not be reached for comment.
The unusual filing with the Department of Transportation, which assumed supervision of airlines after the Civil Aeronautics Board was dismantled earlier this year, appeared to be the first time that an air carrier has tried to use government regulations pertaining to the certification of airline operations to block a hostile takeover attempt.
Icahn has said that so far he is interested in TWA only as an investment, but he has refused to rule out any other strategies, such as a takeover. Icahn's holding in TWA has only become known in the past week, but TWA said he had been amassing stock in the company since December.
TWA has said in recent days that it believes Icahn is attempting to "intimidate" it, and that it believes Icahn's intents are "contrary to the best interests of our shareholders, employes and the traveling public."
But yesterday's filing with the DOT takes that argument even further. TWA asked the department to investigate the "continuing fitness" of TWA should Icahn gain control, and requested that its operating certificates be modified to prevent Icahn from taking over the airline.
"TWA believes -- based on Icahn's well-deserved reputation as a corporate 'pirate,' his history of aggressive actions toward companies in which he has invested, the 'get-rich-quick' expectations of his co-investors, the economic factors attendant to his purchases of TWA shares, and the proposals and views that Icahn has expressed to TWA -- that Icahn will imminently seek to solidify his control over the conduct of TWA's business by means of further share purchases or otherwise," TWA said in its filing.
"There has never been a case, insofar as TWA is aware, where Icahn has been content to participate in the existing operations of the company as a passive long-term investor."
In recent years, Icahn has made a series of highly profitable hit-and-run stock raids on corporations, most notably his attempt late last year to gain control of Phillips Petroleum Co. He dropped that effort after making a $50 million profit, plus $30 million in expenses paid him by Phillips, and after forcing Phillips into a sweeping financial restructuring.
In addition to raising questions about Icahn's motives and his financial and managerial abilities to control TWA, the airline portrayed him as someone with little regard for the niceties of business law, citing a number of Icahn's past run-ins with New York Stock Exchange and Securities and Exchange Commission officials and other regulators. "Icahn has demonstrated, beyond any fair question, a singular disregard for statutory and administrative regulation of his business activities," the airline said. "In short, Icahn does not have the required compliance disposition and in this regard is unfit."
TWA said it believed that if Icahn gained control of the airline, he would attempt, among other things, to liquidate all or part of it or to divert much of its cash flow to other of Icahn's activities. "The implementation by Icahn of any one of the foregoing schemes would seriously disrupt TWA's operations and management," the airline said.