TWA &lt;TWA> TANGLES PIEDMONT &lt;PIE> SITUATION

  Trans World Airlines Inc complicated
  the bidding for Piedmont Aviation Inc by offering either to buy
  Piedmont suitor USAir Group or, alternatively, to merge with
  Piedmont and USAir.
      Piedmont's board was meeting today, and Wall Street
  speculated the board was discussing opposing bids from Norfolk
  Southern Corp and USAir. The TWA offer was announced shortly
  after the Piedmont board meeting was scheduled to begin.
      TWA offered to buy USAir for 52 dlrs cash per share. It
  also said it was the largest shareholder of USAir and
  threatened to go directly to USAir shareholders with an offer
  for 51 pct of the stock at a lower price.
      TWA also said it believed its offer was a better deal for
  USAir shareholders than an acquisition of Piedmont, but it said
  it alternatively would discuss a three-way combination of the
  airlines.
      Market sources and analysts speculated that TWA chairman
  Carl Icahn made the offer in order to put his own airline into
  the takeover arena.
      "We're just wondering if he's not just trying to get TWA
  into play. There's speculation on the street he just wants to
  move onto somthing else," said one arbitrager. "We think TWA
  might just be putting up a trial balloon."
      Analysts said the offer must be taken seriously by USAir,
  but that the airline will probably reject it because the price
  is relatively low compared to other airline deals.
      They also said Icahn must prove his offer credible by
  revealing financing arrangements. "They need to show their
  commitment and their ability to finance. I think it's a
  credible offer," said Timothy Pettee, a Bear Stearns analyst.
      "I think it's certainly on the low end of relative values
  of airline deals," said Pettee. Pettee estimated 58 dlrs would
  be in a more reasonable range based on other airline mergers.
      USAir stock soared after TWA made public its offer. A
  spokesman for USAir declined comment, and said USAir had not
  changed its offer for Piedmont. USAir offered of buy 50 pct of
  that airline's stock for 71 dlrs cash per share and the balance
  for 73 dlrs per share in USAir stock.
      USAir closed up 5-3/8 at 49-1/8 on volume of 1.9 mln
  shares.
      Piedmont, which slipped 1/2 to close at 69-5/8, also
  remained silent on the TWA action. Piedmont has an outstanding
  65 dlr cash per share offer from Norfolk Southern Corp.
      Norfolk Southern declined comment, but said it stuck with
  its offer for Piedmont. Norfolk owns about 20 pct of Piedmont
  and opened the bidding when it said it would propose a takeover
  of Piedmont.
      Some analysts said Icahn may be trying to acquire USAir to
  make his own airline a more attractive takeover target.
      "Icahn I think had wanted to sell his airline and there
  were no takers. I think the strategy might have called for
  making his investment more attractive. One way to accomplish
  that specific objective is to go out and acquire other
  airlines," said Andrew Kim of Eberstadt Fleming.
      "I don't know whose going to buy them, but at least this
  way it becomes a much more viable package," said Kim.
      But Icahn's financing ability for such a transaction
  remains in doubt, in part because of TWA's heavy debt load.
      Wall street sources said TWA has some cash with which to do
  the offer.
      The sources said Icahn has not lined up outside financial
  advisers and plans to make his own arrangements.
     Icahn earlier this year abandoned plans to buy USX Corp &lt;X>
  and still retains 11 pct of that company's stock.
      Some Wall street sources said the financier's USX plan was
  impacted by the cloud hanging over his adviser, Drexel Burnham
  Lambert Inc, because of Wall Street's insider trading scandal.
      Industry sources also predicted USAir might reject the TWA
  offer on price and financing concerns. "It's littered with
  contingencies and it doesn't even have a financing
  arrangement," said one executive at another major airline.
      But the executive conceded a merged TWA-USAir would be a
  strong contender with USAir's east coast route system and
  planned west coast presence from PSA. USAir could feed the
  intenrational flights of TWA, which has a midwest presence in
  its St. Louis hub. Adding Piedmont, dominant in the southeast,
  to the mix would develop an even stronger force.
      The combined entity would also have TWA's pars reservation
  system.
      Such a merger would be complex and analysts said it would
  result in an airline iwth an 18 pct market share.
  

