Will corporate raider Carl Icahn be allowed to proceed with his $18-a-share hostile takeover bid for Trans World Airlines Inc.?
The answer to that question probably will not be known until Tuesday. After hearing testimony from Icahn and TWA Chairman C. E. Meyer Jr. yesterday, New York Federal District Court Judge John Cannella said he will wait until Tuesday morning to announce whether to grant a temporary injunction sought by TWA against Icahn's takeover bid.
Icahn recently has purchased about 25 percent of TWA, but sources said he has agreed not to purchase any more stock until Cannella's ruling. TWA has called Icahn's presence "uninvited and undesirable" and has launched an aggressive campaign in the courts, Congress and the press to try to prevent him from gaining control of the company.
Icahn said yesterday he has no plans to sell routes or airplanes if he acquires control of TWA. He said that TWA management convinced him in a meeting earlier this month that his plan to sell about 30 airplanes and curtail many routes was wrong. But TWA officials said yesterday they believe Icahn plans to sell many of the company's assets if he wins his battle for control.
TWA has appealed to Congress and to the Department of Transportation to try and block Icahn. TWA has told DOT that Icahn is not "fit" to run an airline. Sources said that if Icahn gains control of the company, he plans to "bring in the best available people to run it."
Sens. John Danforth (R-Mo.) and Thomas F. Eagleton (D-Mo.) have introduced legislation that 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. Icahn has said the proposal would only affect someone who wants to sell the foreign routes, which is not his intention. TWA is a major employer in Missouri.
Icahn said on Thursday that TWA's compensation committee has given out 30 golden parachutes -- lucrative compensation arrangements for executives of companies that are acquired in unfriendly takeovers.
TWA officials corrected Icahn yesterday. They said they had given out 29 golden parachutes and already had three in place for the top officers of the company.
"The reason for this, quite honestly, is that there is a certain level of anxiety, and people start wondering about their futures," a TWA official said. "To take away anxieties they may have, it is essential that they feel a certain level of comfort. These key people are essential for continuing day-to-day operation of the airline. I think it is a relatively small factor in this whole thing."
Icahn has said he thinks TWA could operate more profitably if he gained control of the company and negotiated a new labor contract.
Last year TWA had revenue of $3.66 billion and net income of $29.9 million.