Pan Am's Buy

Merger with National nearer

Pan American World Airways took another step last week toward achieving its long cherished dream of acquiring U.S. domestic routes to tie in with its far-flung foreign network. It disclosed that after a stock-buying spree early last week, it now owns 4,398,500 shares, or 51.4%, of National Airlines, thus beating out two rivals for majority interest in the line. Texas International, a small, aggressive carrier that, like Pan Am, has received preliminary approval to merge with National from the Civil Aeronautics Board, holds about 25% of the stock. Eastern Air Lines has also been trying to gain control of National in a separate proceeding, but has so far not got a preliminary CAB decision on its application.

If Pan Am's merger bid is approved, it has enough stock to take immediate control of the company without having to negotiate with other shareholders. Despite its majority holdings, Pan Am, which paid $42 a share, or about $186 million, for the stock, does not control National. Under a CAB dictate, all the contenders must hold their National shares in a nonvoting trust. In addition, Pan Am still has several important hurdles to clear. For example, the CAB must still give Pan Am approval after consulting with the Justice Department about whether the merger violates antitrust laws. Finally, the merger decision must go to President Carter, who can either approve or veto it.

Carter has not in the past looked especially kindly on Pan Am. In 1978, for instance, the CAB recommended that Pan Am be awarded a new route between Dallas-Fort Worth and London. Carter rejected the recommendation. Instead, he gave the route to Dallas-based Braniff Airways in what some critics thought was a blatant political bid for support of his energy program by Texas Congressmen. In short, though Pan Am's position is substantially strengthened by its majority holding, its merger with National is not yet guaranteed.

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