Trans World Airlines Inc. won the support of two key congressmen yesterday in its fight against takeover specialist Carl C. Icahn, who is making a $600 million bid for the company.
Hours after TWA Chairman C. E. Meyer urged a Senate Commerce subcommittee to take quick action to block Icahn's attempt to gain control of the nation's fifth-largest air carrier, Sen. John Danforth (R-Mo.), chairman of the full Commerce Committee, introduced legislation that could could make it economically unattractive for corporate raiders to buy TWA and other international airlines.
Meanwhile, Rep. Norman Mineta (D-Calif.), chairman of the House aviation subcommittee, already had introduced a measure that would bar Icahn from gaining control of TWA for at least 90 days -- or until the Department of Transportation had time to rule on whether Icahn was fit to run an airline.
At the same time, TWA filed a new request with the Department of Transportation, asking the government to issue an emergency order barring Icahn, who already owns about 25 percent of the company's stock, from exercising control of his stock or from buying any more shares, making a tender offer for the remaining shares, or carrying out his proposal to remove TWA's incumbent board members.
The order sought by TWA would remain in effect until DOT had time to hold a hearing to consider whether Icahn was "fit" to run an airline.
Icahn, in announcing his takeover bid earlier this week, said that if he gained control, he would "expect to operate TWA in the long-term interests of TWA, its employes and the traveling public."
Meyer, saying that Icahn's offer represented "a threat to the operation" of TWA, told the Senate subcommittee that unless Icahn was stopped immediately, a takeover could take place within a short time -- perhaps a few days.
"What is urgently needed is a freeze on the situation as it now exists," Meyer said. "We need to hold everything still to prevent control from changing hands."
Otherwise, he charged, Icahn "will take control and attempt over a period of time to liquidate TWA or at the very least spend no money" and make it impossible "for TWA to compete." Ultimately, he said, Icahn's takeover would lead "to the bankruptcy of the company."
Icahn said yesterday in a telephone interview that he has "absolutely no plans or intentions to liquidate TWA, its fleet of planes, or to curtail or sell its routes."
Danforth's legislation, cosponsored by Democrat Sen. Tom Eagleton, also from Missouri, where TWA is a major employer, would deter corporate raiders from buying international air carriers for the sole purpose of liquidating their assets, including their profitable rights to fly certain international routes.
Under the legislation, which would apply to any takeover completed after yesterday, DOT would be ordered to block the sale of any international route certificate after a hostile takeover if the government determined the takeover was made solely to liquidate an airline's assets.
Icahn said yesterday Danforth's proposal would only affect someone who wants to sell the foreign routes, which is not his intention.
In the subcommittee hearing held just a few hours before Danforth introduced his bill, the senator acknowledged that he was a longtime proponent of airline deregulation.
However, he added, he "would not stand by and seriously see a major airline liquidated." If Icahn is buying TWA to liquidate its assets for money, "this is something Congress would not accept," Danforth said.
Without legislation, it is unclear how receptive DOT will be to responding to TWA's request to hold a hearing on Icahn's fitness before he gains control of the company. Among other things, TWA contends Icahn is unfit because he doesn't know anything about the aviation industry.
"The fact that Icahn doesn't know anything about running an airline is not a good reason to investigate," a DOT spokesman said. Additionally, he said, given the administration's deregulatory philosophy, DOT may not want to interfere.
If Icahn wants to break up the company and sell the domestic routes, that is not a concern of DOT, the spokesman added, because under deregulation, other carriers could come in and serve the routes TWA flew. DOT would make sure that the international routes -- which are the most profitable of TWA's systems -- would continue to be served by another carrier.
Sources said yesterday that if Icahn gained control of the company, he would not manage it himself, but would try to "bring in the best available people to run it."
Meyer charged that Icahn's move on TWA now makes the airline industry a ripe target for takeovers.
Meyer said that Pan Am could be the next target, noting that it will receive $750 million in cash if its proposed sale of its trans-Pacific routes to United Air Lines Inc. is approved by the government.