Financier may be looking at bankrupt National Airlines

Monday, March 12, 2001 | 11:10 a.m.

Investor Carl Icahn, whose bid to acquire TWA failed today, may have his sights set on Las Vegas-based National Airlines, an airline expert says.

National officials acknowledged that Icahn and National Chief Executive Officer Mike Conway are acquainted with each other, but said there have been no talks for Icahn to have a role in National, which is operating under Chapter 11 bankruptcy protection.

Icahn, the former chairman of TWA, said in a deposition he gave for the TWA bankruptcy case that he plans to start or acquire his own airline, even if he was unsuccessful in his efforts to outbid AMR Corp. for TWA's assets.

Icahn testified in the deposition, given and filed last week, that he wants to link his Las Vegas company, Lowestfare.com, to a small airline. Lowestfare.com has a deal to buy TWA tickets at a discount and sell them at retail prices through its website. Starting or buying another airline would give Lowestfare.com another source of airline seats to sell.

"I intend with Lowestfare -- and we are working on it -- establishing or purchasing a small airline," Icahn said. "We were in discussions with several other airlines about purchasing them or investing money in them."

The ruling against Icahn today set the stage for Icahn to look elsewhere besides TWA, possibly close to Lowestfare.com's home.

"You do have National in bankruptcy right now," said Mike Boyd of the Boyd Group, an Evergreen, Colo.-based aviation consultant. "If there's a wounded airline out there, you'll find Carl Icahn circling around, so National could be a possibility."

Boyd said Icahn could also "make an end run on Alaska (Airlines) or America West," but he felt National could be a more likely target because it is based in Las Vegas and all of its flights either depart from or arrive at Las Vegas' McCarran International Airport.

Officials with Lowestfare.com could not be reached today -- they have repeatedly declined comment on Icahn's efforts to acquire TWA. Icahn also owns three Las Vegas hotel-casino properties.

Boyd said Icahn's track record suggests he would attempt to acquire an airline in bankruptcy rather than start his own carrier.

"Carl Icahn doesn't build anything," Boyd said. "He has the resources to make a run at a weakened company, but he doesn't have the management expertise to run an airline. He's not a guy who is revered in the industry by employees."

When Icahn made his bid for TWA, two unions, the Air Line Pilots Association and the International Association of Machinists and Aerospace Workers, said they opposed his return. Some TWA pilots who attended court hearings wore white badges with a red slash through the name Icahn pinned to their uniforms.

National Airlines, which filed for bankruptcy protection in December, has been maintaining its schedule and has said that it is in talks with an investor in the aviation industry. The airline is 48 percent owned by Harrah's Entertainment Corp., owners of the Harrah's and Rio hotel-casinos.

National spokesman Dik Shimizu said the airline has operated close to 98 percent of its flights since the bankruptcy filing and in recent weeks has had record ticket sales, partially because it has more flights and seats to fill.

The company has attributed its financial woes to skyrocketing fuel costs, though it has also been hurt by a shortage of passengers.

"Mr. Conway and Mr. Icahn have talked periodically and it wouldn't surprise me to see his name surface" as a potential suitor for National, Shimizu said.

"We're going to look at and consider any and all comers before making a decision," Shimizu said.

Sun wire services contributed to this report.