Hurwitz Reportedly Weighing Bid For Ailing Continental Airlines

By Jeff Pelline, Chronicle Staff Writer

 Maxxam Inc. Chairman Charles Hurwitz, who runs Pacific Lumber and Kaiser 
Aluminum in Northern California, reportedly is negotiating a buyout of money- 
losing Continental Airlines.

 This could pit Hurwitz against Northwest Airlines, which already has held merger 
talks with Continental.

 Spokesmen for Continental and Maxxam last night declined comment on the reports, 
which are surfacing in Houston, the Texas city that is home to both companies. 
Maxxam Chief Financial Officer John La Duc, reached at home in Houston, also 
declined comment.

 KTRK television in Houston reported last night that ''the deal has been in 
negotiations for three weeks now, and the principals are mum about the financial 
details. But sources stressed that it is a plan led by Continental, with local 
businessman and multimillionaire Hurwitz acting as investor to rescue the 
twice-bankrupt airline.''

 The report was aired by anchor Shara Fryer, who is known to hobnob with wealthy 
and socially prominent Houstonians. This includes Hurwitz and John Connally, a 
Maxxam director and former Texas governor.

 People familiar with Hurwitz said that his main goal would be to turn around the 
ailing airline -- and that this would require an infusion of several hundred 
million dollars.

 Hurwitz is a long-time booster of the city and its economic welfare. Much of 
that is dependent on Continental, which employs 14,000 in the area and is 
proposing to add another 4,900 jobs by building a $ 200 million aircraft 
maintenance facility.

 In addition, Hurwitz has a friendship with Frank Lorenzo, the former Continental 
chairman who has stayed on as a director.

 Hurwitz would not be the first to take a look at Continental. Los Angeles 
investor Marvin Davis also considered investing about $ 300 million in the 
airline but decided to pass.

 Continental filed for Chapter 11 bankruptcy protection last December, and has 
continued to lose money. Any deal for the airline would require the bankruptcy 
judge's approval. 

 Hurwitz, 51, acquired Pacific Lumber of Scotia (Humboldt County) in 1985 in a 
leveraged buyout and upset many environmentalists when he doubled the timber cut 
to pay off debt. In 1988, he bought Oakland-based Kaiser Aluminum in another 
leveraged transaction.

 Maxxam's earnings currently are in decline, largely because of a slump in the 
aluminum business. Kaiser accounts for the bulk of Maxxam's profits and sales.



The San Francisco Chronicle
NOVEMBER 14, 1991, THURSDAY, FINAL EDITION
SECTION: BUSINESS; Pg. C1