Icahn Denies He Has Plans to Sell TWA : Says Line Will Be One of Strongest in World
In an apparent effort to reassure Trans World Airlines’ 27,000 employees, financier Carl C. Icahn, who became chairman of the company last week, reiterated in a letter Wednesday that he has no plans to sell the ailing air carrier.
In his two-page letter sent to all employees, Icahn also said he believes that “TWA will emerge as one of the financially strongest airlines in the world.” He said the airline will have as much as $1 billion in capital when his investment bankers, Drexel Burnham Lambert, raise $750 million for it.
As to persistent talk that he will sell the airline, he wrote: “Certain articles that I have seen indicate that I wish to sell TWA. I find this speculation strange inasmuch as I have never sold or liquidated a company after gaining control.”
Speculation has been widespread on Wall Street that Icahn plans to sell TWA quickly to another airline. Among those mentioned as potential buyers are American and Northwest airlines. Another possible candidate is Texas Air, which for most of last summer fought bitterly with Icahn for control of TWA.
The New York investor, who owns 52% of the airline, took control of the TWA board Friday, scrapping an earlier agreement to buy the rest of the common shares for $19.50 in cash and $4.50 in preferred stock. Instead, Icahn offered shareholders preferred stock and offered the airline the $750 million to be raised by Drexel Burnham.
In his letter, Icahn said that airlines with weak capital structures “will have difficulty surviving.” But, he added, TWA’s new capital structure will help to make it one of the “leading airlines of the world.”
He also cited his $420-million acquisition of ACF Industries in 1984 as an example of how he develops rather than sells the companies that he buys. However, he did sell some ACF divisions so that the firm could concentrate on its primary business of leasing railroad cars.
Employee reaction to Icahn’s letter was mixed.
“I have no qualms with the letter. I think that Icahn will be good for the company,” said Winston Williams, a lead mechanic at Los Angeles International Airport who has been with TWA for 23 years. “He has made a big investment in TWA. A financial wizard like that would not be taking over as chairman of a company that he knows is going to disgrace his image or his name.”
But a secretary in the airline’s New York headquarters, who declined to be identified, was unconvinced.
“I’d like to believe everything he is saying,” she said. “But I question it. I just don’t know how sincere he is.”
