NEW YORK -- Trans World Airlines Inc. has offered to buy Pan Am Corp. for as much as $450 million in cash and securities, Pan Am said yesterday.
A Pan Am spokeswoman, Pamela Hanlon, said TWA's proposal was contingent upon the cancellation of an agreement Pan Am had made to sell its important United States-to-London routes to the parent company of United Airlines.
TWA also stipulated that Pan Am and TWA would have to sell overlapping international routes when the Pan Am buyout was ** completed, she said.
It was not clear whether the TWA proposal could be considered a serious bid for Pan Am, which has been reeling from financial problems for several years, or merely an attempt by Carl C. Icahn, the corporate financier and chairman of TWA, to intercept the planned sale of Pan Am's valuable London routes to UAL Corp. for $450 million. The sale is scheduled to close by Friday.
The profitable Pan Am Shuttle in the Northeast would not be included in the deal announced yesterday, but TWA also proposed buying the shuttle by the end of the year, in a separate transaction.
The proposed deal faces many obstacles, including the need for approval from the Justice Department and the Transportation Department, as well as from British authorities.
TWA is also among the weakest of the nation's carriers, with an old fleet of aircraft, labor problems and a large amount of debt.
Ms. Hanlon would not comment on whether Pan Am was seriously considering the TWA bid.
"The focus of the company's attention is completion of the documentation with United Airlines before Nov. 14," she said.
Besides the sale of the London routes, United entered into a marketing agreement with Pan Am, in which the carriers will share frequent-flier programs and coordinate timetables to feed each each other's flights.
The TWA bid, which was relayed in a letter delivered to Pan Am late Friday, promised shareholders $1 a share in cash and $2 a share in securities. Pan Am has 151 million outstanding shares.
Pan Am's share price rose 12.5 cents Friday, to $1.625, on the New York Stock Exchange.
Mr. Icahn said in his letter that the proposal was open until Nov. 16 and that he hoped for a merger by March 31, 1991.
Raymond Neidl, an analyst with Dillon, Read & Co., said the price offered by TWA might actually be lower since the securities would be bought at face value. He said the bid was apparently low because, unlike the propsed United transaction, TWA would be acquiring Pan Am's debt, which comes to nearly $1 billion, as well as about $300 million in an unfinanced employee pension liability.
But Mr. Neidl added, "Even with all of Pan Am's problems, TWA might be getting a bargain."
TWA and Pan American World Airways are the only two U.S. airlines flying to Heathrow Airport in London. The routes Pan Am has agreed to sell United would be among the duplications that would have to be sold for the buyout to go through.
Other duplications are between the United States and Paris and the United States and Rome.