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· VOLUME 48 NUMBER 17 AUGUST 26, 1985 Funny, They Don't Look Italian! TWA stated that it has received a letter fromMr. kahn, providing that if the Board Board Acts declined to grant lock-ups of the type sug­ Trans World Airlines, Inc., has announced gested by Texas Air, Mr. kahn agreed to that its Board of Directors has declined permit the Texas Air merger proposal to to take any of the steps suggested by be voted on by TWA stockholders and to Texas Air Corporation to "lock up" Texas hold open the kahn $24 per share merger Air's $26 per share merger proposal. proposal for Board action until two weeks The TWA Board wq.s unwilling to grant after the Texas Air proposal has been Texas Air options to buy either TWits voted on by TWA stockholders. The let­ trans-Atlantic routes and associated facili­ ter also sets forth various specific terms of ties or its PARS reservation system and the kahnmerger proposal. Mr. kahn also related facilities. "These routes and the delivered to TWA a letter from a major PARS system are the heart of TWA," a commercial bank, stating that, subject to Company spokesman said, "and the Board due diligence, it was "highly confident" of did not want to take any action that could its ability to arrange the necessary financ­ lead to dismemberment of the airline. " ing for the kahn merger proposal. The Board also decided not to issue to TWA has been informed by representa­ Texas Air a preferred stock with multiple tives of its pilot's and machinist's unions votes. The purpose of such preferred that their respective memberships have stock would have been to allow the mer­ ratified Mr. kahn's agreements with such ger to be consummated over the an­ unions. nounced opposition of Carl C. kahn, who A TWA spokesman stated: "The TWA owns 45% of TWA common stock. The Board considers it very important to TWA Board .considered such a tactic to be of stockholders that, in light of Mr. kahn's uncertain legality, and could be deemed to presumptive ability to block the Texas Air be an inequitable business practice, in that merger, TWA should have available to it its sole purpose would have been to neu­ . Mr. kahn's $24 merger proposal. We tralize the voting power which Mr. kahn think $24 per share, which is 33% above For influencing more than 5,000 Italian tourists to visit Arizona since 1982, has paid over $250 million to acquire in the Mr. kahn's initial offer of $18 per share, is officials of Gastaldi Tours, TWA's general sales agent in Genoa, have been marketplace. an excellent price for our stockholders. made honorary citizens of Tucson. Pictured at the Tanque Verde Guest Ranch The board furtherconcluded that other Mr. kahn has clearly stated that his $24 are (fromleft) ranch owner Bob Cote; Remo Tedeschi, general sales manager . steps proposed by Texas Air would not be proposal might not be made available if for Gastaldi; Lewis Murphy, mayor of Tucson; Filippo Cerruti, owner of effective without implementation of the TWA granted lock-up options to Texas Gastaldi Tours, and Don Sanstede, TWA sales manager, Tucson. asset option or stock issuance. Air. Mr. kahn's willingness to commit himself to a $24 merger played a major role in TWits decision not to grant lock­ ups to Texas·Air." She Didn't Take No for an Answer Another factor which influenced TWits Only five days before their scheduled de­ the good news. She made arrangements Everyone else in the tour group had re­ decision was the fact that Mr. kahn's mer­ parture in June, George and Ada Happ for them to be upgraded whenever possi­ ceiyed a room key and their baggage, but ger could be consummated more quickly learned that their reservations for TWits ble and for special "kid gloves" treatment the Happs were still waiting. The hotel than Texas Air's merger and is not subject 17 -day Alpipe Adventure Getaway tour at the airports en route- San Jose, St. said it had no room reserved for them. to the contingency of review by the De­ had been canceled. Their travel agent had Louis and JFK. The misunderstanding was quickly partment of Transportation. In this re­ made a mistake. They had a wonderful time in Europe. cleared up however. It turned out the gard, Mr. kahn has agreed to increase his "The Happs called the sales office to Their only anxious moment came when $24 per share proposal by $. 25 for each they arrived at a hotel in Switzerland. inquire about Frequent Flight Bonus plan (to page 3) full30-day period following November 30 mileage credits for the tour," recalls during which his merger transaction has Sandy Gomez, account representative in They Have Something in Common not been consummated (assuming proxy TWitsSan Jose sales office. "We checked materials for the kahn merger have been their reservations and discovered that distributed by October30) . they had been canceled. Mrs. Happ cried The TWA Board also considered the when I told her what had happened," very significant concessions which two of Sandy says. its major unions had granted to Mr. kahn, The Happs,. an elderly couple fromSan and which would be major factors in mak­ Jose, already had their bags packed, and ing TWA a substantially more competitive tickets and boarding passes in hand. and profitable airline. While the Company By then, it was night in London- too believes that the anti-Texas Air senti­ late' to call Travellers International, which ments expressed by many TWA employ­ operates the ground portion of the TWA ees were unduly negative, the Board Getaway tours. A call to the Getaway could not help but be concernedover pos­ Vacation Center in Philadelphia was not sible· disruptions in its operations that too encouraging. The hotel space was might have ensued had the Company at­ gone, they said, and it would be next to tempted to lock up the Texas Air merger, impossible to reinstate the Happs at such a particularly during the next six or seven late date, but they· would do what they months that it would take to accomplish­ could. such merger. ·Finally, although TWA initially raised Never Gave Up questions about Mr. kahn;s intentions re­ It-didn't look promising but Sandy would garding the airline, he has since made not give up so easily. During the rest of numerous statements, pledges and spe­ that week, and over the weekend, Sandy cific agreements with the TWA unions, all sent countless messages and called from of which indicate that he does not intend to work and home, talking to Travellers in take the hanhful actions which TWA had London and the Philadelphia tour center, previously feared. TWA participates in England's Youth Training Scheme as a corporate sponsor doing everything she could to help the Assuming that Texas Air desires to put in a program designed to give young people practical experience. Nissan Nae, Happs. Finally at 7:20a.m. Pacific time on regional manager-revenue accounting and credit, could hardly have antici­ its merger proposal to a vote of TWA Monday morning, word came through pated that his two trainees would attract the attention of royalty. Shaking stockholders, TWA will cooperate with that all was clear; the Happs had been hands with Prince Charles is Samantha Matthews, who said afterward, "We Texas Air and take such steps in that reinstated. They were leaving that same chatted for quite some time and discovered we both enjoy jazz music." She regard qS are appropriate to comply with day. and fellow trainee Gurcham Sond are students at the Southall College of TWits obligations under its merger- A delighted Sandy called the Happs with Technology near London. They hope some day to work for TWA. agreement with Texas Air. · Uli Derickson. She was, in the words of Jeanne Valinski Caps TWA Career hostage Thomas Cullins, 'outrageously courageous . She saved lives, literally. Editor's Notes She put her body in between blows and took blows herself. I frankly think there wotild have been more killings, and possi­ One of the nicest guys it's been our bly a whole planeload, without her.' privilege to work with has left TWA after "Most of those on Flight 84 7 were com­ 25 years, for a change of scenery. Jerry pelled to be victims," notes the Times' Cosley was known to more people in the Wycliff: "By all accounts, however, Mrs. company than perhaps anyone else - if Derickson rose above victimization and · not by sight, by voice. "Response Line" transformed the situation by virtue of her was his baby, nurtured continuously since courage. To most Americans, that qualifies he brought it to life in April of 1981. as heroism ." In response to Response Line, Jerry P.S. Mrs. Derickson has been chosen received his share of hate mail and phoned honorary grand marshal of the annual expletives. In their way, these types were Steuben Day Parade down New York's a measure of his success, because they Fifth Avenue on September 21. Walter proved that at least they were listening. Hauusmann, the parade's general chair­ Often we're asked, "How does he do man, called her "a heroine of the first it?" Frankly we don't know, except it took magnitude." some doing. We do know from the busy signal we When the news media need back­ invariably got when we called Response ground and information on the financial Line ourselves that a lot of people out side of the airline industry, they often as there want to know what's going on and to not turn to experts like analyst Ju_lius separate fact from fiction.

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