R.I.P. TWA: Obituary for an Aviation Pioneer

ByDavid Morgan

N E W   Y O R K, Jan. 10, 2001 -- Trans World Airlines, a pioneer of transcontinental and international flight whose initials were synonymous with trendy jet-setting and corporate takeovers, is capping its history as an aviation pioneer with an ignominious ending: filing for bankruptcy protection prior to its buyout by competitor American Airlines. TWA was 75 years old.

The nation's eighth largest airline, TWA entered bankruptcy protection for the third time in a decade by filing in U.S. Bankruptcy Court in Delaware today. But before the latest (and final) financial troubles came a long line of firsts — the first carrier to offer transcontinental and, later, transatlantic service, the first to fly the Boeing 747 on a domestic route, the first to offer business class seating, and nonsmoking sections on all its aircraft.

TWA was born out of two carriers — Western Air Express, formed in 1925; and Transcontinental Air Transport, which debuted in 1928, out of a merger of several air companies and the Pennsylvania Railroad. TAT launched the first transcontinental service between Los Angeles and New York (consisting of two rail links and a Ford Tri-Motor, with a top speed of 140 mph). In 1930, the two airlines merged and took the moniker Transcontinental and Western Air, or TWA.

Having pushed transcontinental service in the 1930s (albeit with a sleepover in Kansas City, Mo., which was for a time the company's headquarters), TWA became a favorite of the Hollywood jet set before there were even jets. Referred to as the "Airline of the Stars," TWA later became a papal favorite as well, having four times returned visiting popes to the Vatican after stateside trips.

Hughes Takes the Controls

In 1939 effective control of TWA was purchased by billionaire Howard Hughes, head of Hughes Aircraft. Though precluded by law from selling his own company's planes to his own carrier, Hughes was able to thwart one of his competitors, Douglas Aircraft, in the rapidly growing civilian airline industry.

While United and American Airlines were moving forward with Douglas' advanced commercial plane, the DC-4, Hughes and TWA President Jack Frye pushed their concept of a four-engine pressurized airliner that allowed it to cruise at 20,000 feet at a top speed of 340 mph. Development of the Lockheed Constellation was slowed by the war, but Hughes showed off his handiwork in 1944 by flying it cross-country in 6 hours 57 minutes, beating the then-current speed record.

During the postwar years, TWA emerged as a leading carrier, inaugurating transatlantic service when a Constellation flew from New York to Paris on Feb. 5, 1946. Service to Rome, Athens, Cairo, Lisbon and Madrid began soon afterward, as did the first regularly scheduled overseas air cargo service. Having established a global name for itself with its "Sky Chief" sleeper flights, the airline took a new name: Trans World Airlines, conveniently keeping its recognizable initials.

Among other firsts for the airline: The first nonstop eastbound scheduled transcontinental service with Super Constellations — Los Angeles to New York in eight hours. (Because of head winds, westbound transcontinental service was forced to stop in Chicago for refueling.)

TWA was also the first to have an all-jet fleet (once the Constellation was retired in 1967), and the first to serve freshly brewed coffee. And while some reels of film have unspooled overhead previously, TWA was the first airline to show regularly scheduled movies in flight (beginning with the Lana Turner potboiler By Love Possessed in 1961).

The airline's image as a trendy transportation company was burnished by the Trans World Flight Center at Idlewild (later John F. Kennedy) International Airport, which opened in May 1962. The landmark terminal, designed by architect Eero Saarinen, features shells of poured concrete that evoke wings — hardly the boxy, rectangular warehouses that many airports resembled at the time.

The airline also instituted the first fully automated, Doppler radar system of navigation for scheduled transatlantic flights, making its New York-to-London flight the first ever operated without a professional navigator aboard.

Fatal Crash Mars Comeback

For all the high points, there were famous lows as well, including a 1985 hijacking by Shiite gunmen, who forced the plane to land in Beirut, Lebanon. A U.S. Navy diver was killed and 39 Americans held hostage for 17 days. The next year, four Americans were killed when a bomb under a seat exploded on a TWA flight from Athens to Rome.

Perhaps most damaging to the company's public image was the 1996 crash of TWA Flight 800 from New York to Paris, which killed all 230 people on board. The disaster and the continuing controversy about its cause came just as the airline was emerging from its second trip through Chapter 11 bankruptcy protection.

Last summer, the National Transportation Safety Board board concluded that TWA Flight 800’s Boeing 747 was destroyed by an explosion in its center fuel tank, probably triggered by a short circuit. It asked the Federal Aviation Administration to examine aircraft wiring practices and require improvements.

The Corporate Makeovers

While Howard Hughes lost his control of the airline in 1960, having overextended himself on aircraft orders, it was later internecine feuds that would cost the company dearly.

The last 20 years have marked an Alice in Wonderland-like trail of corporate intrigue that still rankles management, labor and customers, during which the carrier lost hundreds of millions of dollars while its former owner continues to reap hundreds of millions in the sale of discounted seats.

In 1979 Trans World Corporation was formed, with TWA a subsidiary of a corporation that also ran hotels and food services, and sold real estate. TWA was spun off from Trans World Corp. in 1983, becoming a public company, and was thereafter acquired by financier Carl Icahn, who would later gain renown as a corporate raider of such firms as General Motors and RJR Nabisco.

Icahn turned the company private in 1988, in a move which took $610.3 million out of TWA (of which $469 million went to Icahn) and added $539.7 million to the airline's debt. What followed was a torturous battle for control among management as the company's finances faltered.

In the 1990s air routes were sold to American for nearly half a billion dollars, while the company petitioned twice for bankruptcy. The airline's three major labor unions acquired a 45 percent equity stake in return for concessions, and Icahn resigned as chairman, albeit with the provision that he be allowed to purchase ticket at 55 cents on the dollar — which he has resold on his new Web site, lowestfares.com.

Since taking over as CEO two years ago, Bill Compton (a former TWA pilot) led a spirited effort to rebuild TWA. Small, mini-hub operations were opened in Puerto Rico and Los Angeles, and the airline was starting to focus on transcontinental routes, including an exclusive route from Los Angeles to Washington's Ronald Reagan National Airport.

At the same time, Compton was trimming unprofitable routes, including some flights to Europe, adding regional service, getting rid of excess property and updating the airline's fleet with new aircraft.

Those new planes, in the long run, were to cut down on training, maintenance and fuel costs. But those savings, while starting to have some effect, were years away from making a significant difference.

Can't Win For Losing

Stuck with high aircraft lease payments and unable to hedge against high fuel prices because of its poor credit, TWA was hammered last year when the price of jet fuel spiked to almost double its 1999 price.

"Fuel costs have just remained higher than most airlines had anticipated, and analysts in all honesty," said Robert Milmore, an analyst at Arnhold and Bleichroeder in New York. "No one really felt that fuel was going to remain as high as it did."

Partly because of the high cost of fuel, TWA entered the fourth quarter with just $157 million in cash, well below what it has normally had on hand since the 1995 reorganization. The fourth quarter is traditionally the company's biggest money loser, though TWA filled its highest percentage of seats in the fourth quarter of 2000 since airline deregulation.

Compton and others were looking ahead to 2003, when the fleet modernization program would have been largely complete. Also that year, the airline's ticket resale deal with former owner Icahn was scheduled to end.

In the air, at least, TWA was succeeding: A record 26.4 million passengers flew in 2000. It consistently posted an industry best record for on-time completion — something large carriers have struggled with lately — and won awards for customer satisfaction.

But its finances were a disaster: 2000 was the 12th straight year the carrier operated in the red (its losses in the first three quarters of the year equaled $115.1 million).

As the company heads into bankruptcy (with more than $200 million in debts, half of which was due next week), it leaves approximately 21,000 employees and about 200 aircraft.

The Associated Press contributed to this report.

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