Saudi prince buys 5 per cent stake in TWA

Living up to his reputation for putting big money into struggling but ostensibly still salvageable companies, Prince al-Waleed bin Talal of Saudi Arabia has taken a 5 per cent stake in Trans World Airlines.

News of the investment came one day after TWA disappointed Wall Street with worse-than-expected fourth-quarter earnings. The loss of $258.6m (pounds 162m) on revenues of $803.3m underlined the difficulties still confronting the airline since it was struck with last summer's crash of TWA 800.

For the billionaire prince, who is a nephew of Saudi Arabia's King Fahd and the grandson of Saudi Arabia's founder, Ibn Saud, the TWA purchase represents a first foray into civil aviation. TWA is America's sixth carrier and was the only big US airline to show a loss in 1996.

From his base in Riyadh the prince, 40, controls an international investment portfolio that includes a bank, a supermarket chain, the Fairmont and Four Seasons Hotel chains as well as extensive property holdings.

However, it has been the prince's willingness to put cash into high-profile ventures in times of desperate need that has earned him the biggest headlines. Most notably, he provided the dollars to rescue both the Canary Wharf development in London's Docklands, the home of this newspaper, and the Euro Disney theme park in France.

Perhaps most astonishing, however, given the conservative nature of the Saudi royal family, was Prince Al-Waleed's decision last year to sign an agreement with rock star Michael Jackson to establish a joint venture company named Kingdom Entertainment. The company was created to promote concerts, films, television projects, fun parks and hotels.

TWA said yesterday that its newly installed chairman, Gerald Gitner, was told by the prince that he had no plans to increase his stake in the carrier. To gain his 5 per cent holding, the prince purchased 2,088,000 shares of common stock. With TWA shares priced at $6.875 at the close on Tuesday, that would translate into a fairly modest investment of $14.34m.

While the prince's investment will provide a morale booster for TWA, the future of the carrier remains uncertain. Last month, the main union at the carrier tried to promote a possible bid for control by a New Jersey investment group with participation by Russia's number-two airline, Transaero. Nothing appears to have come of the approach, however.

In announcing the fourth-quarter losses, Mr Gitner blamed several factors beyond the TWA 800 crash. In particular, he pointed to previous management for attempting an over-ambitious flight schedule in the 1996 summer season that led to poor reliability and on-time performance.

Last month Mr Gitner announced new moves aimed at saving the airline, including the disposal of its ageing jumbo jets, which will be replaced by new and more efficient Boeing 767s and 757s.