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Eastern Against Merger of TWA and Texas Air : To Seek Some of TWA’s International Routes

Times Staff Writer

Eastern Airlines plans to vigorously oppose the proposed merger of Trans World Airlines and Texas Air Corp., Frank Borman, Eastern’s chairman and chief executive, said Tuesday.

He elaborated on such intentions at a news conference following Eastern’s annual meeting here, making it clear that he would like Eastern to be awarded some of TWA’s lucrative international routes.

Texas Air, which owns Continental Airlines and New York Air, announced June 13 that it plans to buy control of TWA for $23 a share in cash and notes.

With a combined fleet of 294 jets, 40,000 employees and $5 billion in revenue, the Texas Air-Continental-New York Air-TWA combine would vie with American Airlines, which has 250 aircraft and 46,900 employees, for the second spot behind United Airlines.

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“We will attempt to persuade the Department of Transportation that they should not simply transfer all the assets of these corporations without examining them individually,” Borman said after the meeting. “We believe the international routes, which were allocated or presented in a period when airlines were regulated, should be examined individually.”

Borman would not specify which TWA routes that Eastern is interested in acquiring. It begins flying to London from Miami in mid-July and has also filed for a route to Spain.

Borman said Eastern was also opposing the planned sale of Pan Am’s Pacific division to United for $750 million for similar reasons.

Richard L. McGraw, senior vice president-communications at Eastern, said later that Eastern would want to “look at serving Europe or the Far East out of some New England cities.”

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McGraw said Eastern also opposed the Texas Air-TWA merger because of the lower wages that Continental and New York Air had imposed on their workers.

The combination, he said, “would be a significant destabilizing factor in the industry. That would become a formidable competitive force for all of the U.S. airlines.”

A Department of Transportation spokesman said that Texas Air and TWA hadn’t yet filed plans with the agency but that Eastern would be free to join the proceedings in opposition. It has already become a party to the proceedings in the Pan Am-United transaction.

Jerry Cosley, a TWA spokesman, said he was not aware of Eastern’s opposition and declined to comment.

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At the annual meeting, Eastern shareholders failed to pass a series of anti-takeover measures, and the meeting was adjourned to Monday in the hope that enough votes will have come in by then to pass the defenses. A total of 51% of all of the 47.7 million outstanding shares are needed to approve such measures, and the airline is 8% short.

The amendments would stagger terms for the board of directors, lengthening the time it would take to gain control of the board; require that mergers and future bylaw changes be approved by at least 80% of all outstanding shares, and allow the calling of special stockholder meetings only by a majority vote of the board.


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