The chance of a merger between Pan American World Airways Inc. and Trans World Airlines Inc. appeared to be fading yesterday, with each company blaming the other.
The two carriers that once dominated the market for foreign travel from the United States are now financially weak shadows of their former selves and generally given little hope of surviving as independent airlines.
On Christmas Day, TWA Chairman Carl C. Icahn accused Pan Am officials of backing out of a Christmas Eve meeting to discuss the terms of a merger. But Pan Am said yesterday no meeting had been scheduled, nor had Icahn ever delivered a firm proposal. Richard Francis, Pan Am's executive vice president and chief financial officer, wrote Icahn yesterday saying that Pan Am now believes, based on Icahn's letter and a conversation yesterday, "that you are not prepared to pursue the offer to our shareholders described in your letter of Dec. 16."
On that date, Icahn outlined a proposal to merge with his competitor for $375 million, including $150 million in securities. But when Pan Am said that an immediate short-term loan was a prerequisite, Icahn said such a loan must be in the context of a bankruptcy filing.
Icahn said in his letter earlier this week that his attorneys had prepared a list of terms, known as a term sheet, to provide the basis for a discussion of a merger and that both sides were to have met Monday to discuss it. Pan Am officials said yesterday that such a meeting is generally held only after such proposals are submitted and analyzed. To date, they said, TWA has provided no such document.
"If you will send us a term sheet spelling out in detail any TWA current proposal (including, if you wish, any offer to purchase the shuttle as previously discussed with you), we would be pleased to consider it and meet with you if it provides an acceptable basis for further discussion," Francis wrote.
Icahn responded immediately in a letter to Francis, charging that Pan Am has "misstated and misunderstood TWA's position." Icahn wrote that his offer to shareholders remains in place, subject to conditions including that there be "no material adverse change" such as bankruptcy or a sale of major assets. In the event of bankruptcy, Icahn said, TWA is willing to provide "debtor-in-possession" interim financing.
"When you are ready to discuss that proposal, or the shareholder proposals described in the previous paragraph, we are ready to meet," he wrote.