Iain
3rd Jun 2001, 01:25
National Airlines in talks with Icahn for bailout
By Simon Hirschfeld
NEW YORK, June 1 (Reuters) - Las Vegas-based National Airlines is in talks with financier Carl Icahn for a deal to bail the airline out of bankruptcy, a National spokesman said Friday.
Icahn has been hungry to control his own airline and use his Lowestfare.com Web site as a distribution channel for the tickets ever since losing access to discounted Trans World Airlines tickets after that carrier filed for bankruptcy and was bought by AMR Corp.'s American Airlines.
In court Friday in Las Vegas, National is asking a judge to force casino operator Harrah's Entertainment Inc. to extend a $16 million letter of credit that allows the airline to get paid immediately when it makes credit card ticket sales.
Without the letter, National's bank would hold the money for a given sale until it completes the flight. Harrah's wants to let the credit line expire, which would be a blow to the struggling airline.
Meanwhile, Icahn has said in court that his offer to save National expires Friday. A National spokesman said the airline is still hoping to reach a deal with Icahn, who right now is the only one with a financing offer.
National spokesman Dik Shimizu said the airline has been having its best days ever from an operational standpoint in the last week. But issues such as aircraft lessors who want to renegotiate lease terms have held up a final deal with Icahn.
"We're in the position where we believe that we're very close to having a deal completed (with Icahn), but we need a little more time," Shimizu told Reuters.
He said he was not familiar with the specifics of Icahn's proposal, which has not been detailed before the court, but said it would likely mean control of the airline by Icahn.
National is asking the court for a ten-day restraining order forcing Harrah's to keep its letter of credit intact. If the judge declines to do so, credit card sales booked by National would start to go to paying back whatever amount is drawn down on the Harrah's credit line, a blow to National's finances.
Harrah's, which wrote down the value of its nearly $40 million investment in National, has said in court that it supports the Icahn offer.
A Harrah's spokesman declined to comment, and Icahn was not immediately available.
Copyright 2001 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.
Iain Holmes
By Simon Hirschfeld
NEW YORK, June 1 (Reuters) - Las Vegas-based National Airlines is in talks with financier Carl Icahn for a deal to bail the airline out of bankruptcy, a National spokesman said Friday.
Icahn has been hungry to control his own airline and use his Lowestfare.com Web site as a distribution channel for the tickets ever since losing access to discounted Trans World Airlines tickets after that carrier filed for bankruptcy and was bought by AMR Corp.'s American Airlines.
In court Friday in Las Vegas, National is asking a judge to force casino operator Harrah's Entertainment Inc. to extend a $16 million letter of credit that allows the airline to get paid immediately when it makes credit card ticket sales.
Without the letter, National's bank would hold the money for a given sale until it completes the flight. Harrah's wants to let the credit line expire, which would be a blow to the struggling airline.
Meanwhile, Icahn has said in court that his offer to save National expires Friday. A National spokesman said the airline is still hoping to reach a deal with Icahn, who right now is the only one with a financing offer.
National spokesman Dik Shimizu said the airline has been having its best days ever from an operational standpoint in the last week. But issues such as aircraft lessors who want to renegotiate lease terms have held up a final deal with Icahn.
"We're in the position where we believe that we're very close to having a deal completed (with Icahn), but we need a little more time," Shimizu told Reuters.
He said he was not familiar with the specifics of Icahn's proposal, which has not been detailed before the court, but said it would likely mean control of the airline by Icahn.
National is asking the court for a ten-day restraining order forcing Harrah's to keep its letter of credit intact. If the judge declines to do so, credit card sales booked by National would start to go to paying back whatever amount is drawn down on the Harrah's credit line, a blow to National's finances.
Harrah's, which wrote down the value of its nearly $40 million investment in National, has said in court that it supports the Icahn offer.
A Harrah's spokesman declined to comment, and Icahn was not immediately available.
Copyright 2001 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content, including by framing or similar means, is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.
Iain Holmes