Financier Carl C. Icahn has broken off efforts to acquire ailing Eastern Airlines after failing to structure a deal that would satisfy the carrier’s unions.
Icahn, chairman of Trans World Airlines Inc., said in an interview with the Wall Street Journal that “the talks are over.”
“It’s unfortunate because a merger with Eastern would have been very positive for TWA. But what will be will be,” he said in Tuesday’s editions of the newspaper.
Icahn reportedly notified Frank Lorenzo, chairman of Eastern parent Texas Air Corp., on Monday that he was unable to reach an understanding with Eastern’s three unions over the weekend.
Icahn had negotiated for more than a week with Lorenzo and Eastern’s pilot and machinist unions, although Icahn never made a specific acquisition proposal. Last Wednesday, New York developer Donald J. Trump agreed to buy the Eastern shuttle for $365 million in cash.
Sources who requested anonymity told Associated Press that the union talks broke down mainly because Icahn was seeking wage concessions from the Eastern unions that the union leaders considered too severe.
Icahn “got too greedy,” one union source told the Journal.
The newspaper also reported that Icahn negotiators became angry when TWA’s machinist union tried to tie its forthcoming contract negotiations with the talks with Eastern.
Lorenzo reportedly had given Icahn an exclusive right until the end of the week to make an offer for Eastern to the Texas Air board. After that deadline, other interested parties could come forward with offers.
Texas Air executives have indicated that money-losing Eastern, minus its profitable Northeast air shuttle, would be worth around $1 billion, according to the New York Times.
In addition to Icahn, other parties that have expressed an interest in buying the rest of Eastern include TWA President Joseph Corr, who is a close associate of Icahn, and a group of major insurance companies, the New York Times said.