THE HISTORY OF AN AIRLINE
Story By Harry Levins
Post-Dispatch Senior Writer From Charles Lindbergh to Howard Hughes to Carl Icahn; from Transcontinental Air Transport to Trans Western Airlines to Trans World Airlines, changes have been constant.
You’d think an airline that survived Howard Hughes could survive anything. But TWA didn’t, and now, the airline that couldn’t die has done just that. Hughes merely weakened TWA before he surrendered control in 1960. The mortal wounds came later: * The deregulation of 1978, which caught TWA unprepared for a whole new ballgame. * The machinations of corporate raider Carl Icahn, who overloaded the airline with debt in the free-wheeling ‘80s. * The boom-or-bust nature of the airline industry, which finally cycled up one too many bust for TWA. For all that, TWA had a long and often glamorous run. And if management sometimes came up short, TWA’s rank and file usually pitched in to make things work. As industry historian Robert Serling put it in 1983: “There is something unique about TWA; it doesn’t quite fit the mold. Its travails were not only more convulsive than most but seldom were the fault of the airline and its people. As much as any airline in the world, TWA is a carrier built on a foundation of loyalty.” And razzle-dazzle and colorful characters, from the very start. The Big Four form The first link in what would become TWA was Transcontinental Air Transport -- self-proclaimed as “the Lindbergh Line,” all to cash in on the fame of adviser Charles Lindbergh. Kansas City-based TAT was incorporated in May 1928 but took more than a year to get off the ground. Almost as soon as it did, it rammed a mountain -- on Sept. 3, 1929, in New Mexico, killing all eight souls aboard a Ford Trimotor. Brave indeed were the passengers of that era. Even an uneventful flight caused ears to ring and stomachs to churn. If an airline made money, and few did, the cash came from airmail subsidies, not passengers. Change came in 1930 from an unlikely source -- Postmaster General Walter Folger Brown. He thought the nation needed airlines that carried more people than mail. Brown summoned airline chiefs to Washington and offered a deal. If the airlines would merge into units big enough to make economic sense, the government would give them a lock on cross-continental routes. After some head-banging, three big transcontinental lines emerged: * On the northern route through Chicago, what would become United. * On the southern route through Dallas, what would become American. * On the central route through St. Louis, an amalgamation of TAT and Western Air Express -- Trans Western Airlines, or TWA. * The north-south routes along the Atlantic Seaboard went to a fourth amalgamation, Eastern. Collectively, they became The Big Four -- five, if you count Pan Am, which had a monopoly on intercontinental routes. For almost half a century, they had the sky almost to themselves. Washington wins out
A TWA crash put government into the airline business in a big way. On May 5, 1935, a TWA DC-2 went down near Kirksville, Mo. The crash killed six people, including U.S. Sen. Bronson Cutting of New Mexico. TWA’s crashes tended to be doubly ugly, because many involved well-known people -- for example, Notre Dame football coach Knute Rockne in 1931 and Hollywood actress Carole Lombard in 1942. But Cutting was more than well-known. He was also well-loved by his colleagues in Congress. His loss so upset the lawmakers that they set up what became the Civil Aeronautics Board. For the airlines, the CAB served as both Big Daddy and Sugar Daddy: * Big Daddy, in that the CAB told the airlines what they could do: where they could fly, and how often, and at what fares, and after what steps to ensure safety. * Sugar Daddy, in that the CAB set fares high enough to keep the airlines in business, no matter what. The airlines became, in effect, public utilities, with the Big Four on top. With profits all but guaranteed, airline managers didn’t have to be terribly astute in the ways of business. The airlines had room for colorful characters, like TWA’s Jack Frye, a brash pilot who took the presidency in 1934. Frye preferred the cockpit to the boardroom and spent as much time as he could at the controls of TWA’s DC-3s, the last word in air travel in the mid-1930s. But Frye had his mind set on something bigger -- the four-engined Boeing Stratoliner. By today’s standards, that plane looks bulbous, almost cartoonish. But in the late ‘30s, only the pressurized Stratoliner could lift TWA’s passengers above the bumpy weather that the DC-3s had to bull through. The financial people to whom Frye answered balked at buying Stratoliners. At that, Frye approached a man so rich that he could afford to indulge his passion for flying -- Howard Hughes, dealer in oil drills, dabbler in Hollywood and adventurer in airplanes. At Frye’s urging, Hughes started cornering TWA’s stock. By 1940, Hughes owned enough to control the company. For better or for worse, TWA would never be the same. The horizon widens. Hughes had in mind something grander than the Stratoliner. He envisioned a four-engined airliner that could cross America nonstop, at unheard-of speeds high above the weather. Hughes approached Lockheed Aircraft, which agreed to design something to his specifications. The result was the Lockheed Constellation, a triple-tailed airliner whose streamlined curves lent it an almost feminine grace. The Constellation -- “the Connie,” to a generation of pilots -- came to symbolize TWA and Hughes. (In the end, the Connie would just about kill TWA, but that’s jumping ahead of our story.) Before Lockheed could tool up to build Connies for TWA, Pearl Harbor intervened. The Army Air Forces commandeered Connie production, which finally got under way in 1944.
On April 17 of that year, Frye and Hughes flew the prototype Connie from Lockheed’s plant in Burbank, Calif., to a bunch of eager generals in Washington. The Connie touched down in the record time of 6 hours, 58 minutes. As it taxied past the waiting newsreel cameras, the generals turned purple with rage -- because Hughes had painted the Connie, which he didn’t own, in the red-and-white livery of TWA, not in the olive drab of the Army Air Forces. In fact, the Army controlled all of TWA’s four-engined fleet. Just days after Pearl Harbor, Frye put the airline’s fleet of Stratoliners at the Army’s disposal. The Stratoliners flew passengers around the globe for the Army, with TWA pilots in the cockpits, TWA mechanics servicing the planes and TWA dispatchers doing the planning. After the war, Frye’s patriotism paid off big. All that overseas flying for the Army gave TWA the experience it needed to spread its wings internationally. The downside of glamour Even before the war ended, TWA put in for a piece of the postwar pie. In 1943, Frye applied for a batch of new routes, including London and Paris. In so doing, TWA trod on the toes of Pan Am and its aristocratic chief, Juan Trippe. Before the war, Pan Am stood alone among America’s airlines in flying across the Atlantic, and now, it hardly welcomed competition. But if Pan Am had to make room, Trippe said, he’d accept competition from tiny American Export Airlines. Trippe didn’t know that tiny American Export was merging with giant American Airlines. In 1944, Trippe got the bad news: TWA and American would join Pan Am in spanning the postwar ocean. Trippe pulled all the strings he could in Congress, but to no avail. On Feb. 5, 1946, a TWA Connie lifted off from New York, bound for Paris. Although American soon pulled out, TWA stayed the course. The airline got a boost from its domestic routes, which fed passengers to its transatlantic flights; Pan Am was limited to international flights. Pan Am thought of itself as America’s sanctioned overseas flag carrier, and it stuck up its corporate nose at foreign officials and airlines. TWA behaved differently. It pitched in to help foreign airlines get off the ground, winning good friends and a good reputation. In 1950, TWA changed the “W” in its name from “Western” to “World,” as befit its new span. At home, thanks to Hughes’ Hollywood connections, TWA got a gloss as the glamour airline. When the stars flew, they tended to fly TWA; the airline’s press agents made sure the newspapers got pictures of the rich and famous boarding TWA’s Connies. Hughes vexed his dispatchers by holding flights until dawdling stars could arrive. Big-time Hollywood columnists like Hedda Hopper and Louella Parsons got red-carpet treatment, with TWA limousines toting them to and from airports. Publicity like that attracted hordes of first-time fliers to TWA. Most were well-heeled vacationers who could afford the steep fares of the postwar era. But the glamour image had two big drawbacks: * Most of TWA’s routes ran east and west -- fine for summertime vacationers, but weak in the winter, when vacationers head south. Before long, TWA began bleeding each winter, a chronic condition up to the end. * Business passengers could have taken up the winter slack, but they tended to shun glitzy TWA. They wanted steady, sober service, the kind they associated with United and American. While TWA flew stars, its rivals snared the most desirable passengers -- full-fare, frequently flying executives. “Airplanes, TWA and girls”
When Hughes died on April 5, 1976, he had long been a recluse in Las Vegas -- emaciated, paranoid about germs, hooked on cocaine, and worth about $2 billion, much of it from the sale of his TWA stock in 1965. In the obituaries, his eccentricities overshadowed his accomplishments. As a teen, he had inherited his father’s fabulously successful Hughes Tool Co., riding it through the oil booms that followed. He invested part of his profits in Hollywood. There, he made some movies daring in their scope (like “Wings,” the 1930 aerial epic) and others daring in their skin (like “The Outlaws,” the ‘40s Western for which he invented the prototype WonderBra, all to display Jane Russell’s charms). But airplanes remained Hughes’ first love. In the ‘30s, he designed and flew a string of record-breaking speedsters that put him on Page One across the nation. And it was a plane of his own design that would put Hughes on the path to his bizarre end -- a photo-recon plane, the XF-11. Hughes crashed the prototype in Beverly Hills in July 1946. He came close to dying; when he finally left the hospital, he took with him an addiction to morphine. Before long, Hughes withdrew from public view. Although he owned a controlling interest in Hollywood’s RKO, he ran the studio from afar and seemingly by whim -- traits with which his underlings at TWA would become wearily familiar. Hughes never held a corporate position at TWA. He didn’t have to; he owned the company. But his meddling exasperated TWA’s executives, who tended to quit in frustration. (Historian Serling called Hughes “the George Steinbrenner of commercial aviation -- a well-intentioned owner who picked capable managers and then drove them crazy.”) Take Carter Burgess, TWA’s president in 1957 -- the year Hughes decided to “borrow” a brand-new Super Constellation. With a co-pilot and a flight engineer conscripted from TWA’s ranks, Hughes took off in June for a brief test flight to Montreal. Six months later, Hughes still had the plane, gallivanting around the Caribbean at the controls. Burgess implored him to return it so TWA could put it to productive use. Hughes refused, whereupon Burgess quit. Hughes hardly cared; as his flight engineer, Bill Bushey, later recalled, “I gathered from that long time with him that he liked three things -- airplanes, TWA and girls.” Trouble is, he liked the wrong kind of airplanes. A bad case of jet lag
In 1952, Hughes spurned an invitation to buy the first jetliner, the British-made Comet. “It isn’t safe,” he said, and it wasn’t. A string of disastrous Comet crashes bolstered the public perception of jets as unsafe. Boeing stood on the brink of changing all that. In 1954, Boeing flew the prototype of a military tanker also designed as a jetliner -- the 707. Hughes was having none of it. After all, he had played no part in designing the 707. The planes he worried most about were the propeller-driven Douglas models flown by American and United. In 1955, Hughes committed TWA to buying 25 upgraded Connies, easily a match for the Douglas prop planes flying in the colors of United and American. Trouble is, shortly after Hughes signed the Connie contract, rival Pan Am ordered 707s. The jet age was under way, and TWA had already been lapped. TWA would be the last of the Big Four to switch totally to jets. In 1958, three years too late, Hughes woke up to inevitability and ordered more than $400 million worth of jetliners and engines. By that time, the boom-or-bust nature of the airline business meant he had no money to pay for them. In 1959, after some financial sleight of hand from Hughes, TWA started flying its first jet, on the San-Francisco-New York route -- and for a month, that lone 707 constituted TWA’s entire jet fleet. Long after its rivals were whisking passengers about on jets, TWA was chugging them along in Connies. (Not until 1967 did TWA retire its last Connie, after a flight on April 6 from New York to Lambert Field.) Hughes, perhaps with dreams of a Son Of Connie, approached Convair with an idea for something different -- a smaller jetliner, the 880. The concept was right, but the airplane wasn’t. Hughes’ meddling made the 880 even more of a financial drain, on TWA as well as on Convair. The airline’s lenders finally got to TWA’s board, and TWA’s board finally got to Hughes. On Dec. 29, 1960, he put his stock into trust -- and abdicated his reign over TWA’s operations. From gold to doldrums. In many ways, the ‘60s were a Golden Age of air travel. The airlines zipped past the railroads as a mass mover of Americans, who delighted in jet-engine speed and jetliner luxury.
In fact, luxury was how the airlines competed. Government barred them from competing on fares, so they competed on frills -- in-flight movies, free cocktails, nubile stewardesses in leggy uniforms. Mostly, the airlines served an elite. High fares shut out low-end travelers -- the GIs, nuns and hippies so common in terminals today. In the ‘60s, flying was a coat-and-tie affair. It couldn’t last, and it didn’t. In fact, the system was already falling apart in America’s two largest states, Texas and California. There, small airlines flew strictly within state borders -- and thus beyond the CAB’s regulatory reach. These airlines (Southwest was one) could and did compete on fares. Some people in government began to think of price competition as a way to strip away the elitism attached to air travel. Washington heard a new buzzword: “deregulation.” Massachusetts Sen. Ted Kennedy picked it up as an issue, and in 1977, President Jimmy Carter handed the chairman’s chair at the CAB to a believer in deregulation, Alfred Kahn. After United broke ranks with the industry and endorsed deregulation, Congress went along. In 1978, deregulation became the law of the land. TWA was woefully unready. The ‘60s had been flush times. TWA led the industry in profits in ‘65, and it branched out as TW Corp., a holding company for hotels and restaurants as well as planes. For a few brief, shining years in the ‘60s, TWA even went truly “trans world,” spanning the Pacific as well as the Atlantic. But tough times arrived in the ‘70s, when TWA began accepting deliveries of jumbo-jet 747s that it couldn’t fill. At first, deregulation did what its backers hoped it would do. It lured new airlines like People Express into the game and slashed fares. But gradually, TWA’s old-line rivals came up with ways to fight back: * Computerized reservations systems. Not only did the computers streamline ticket sales, they also gave airlines like American and United a mother lode of data on who flew where, and on what days, and at what time, and how often. * “Yield management” pricing. Using the computer data, American pioneered the tactic of selling different seats on the same flight for wildly different fares. Tourists who booked early could fly cheaply; expense-account executives who flew at the last minute paid full fare. The computers let the airlines pinpoint how many seats to sell at which fare -- except at TWA, which was late going online. As investment analyst Brian Harris put it in an interview with Reuters, “TWA had a guy with paper and a pencil.” * Frequent-flier programs, to mollify the executive paying full-fare to sit beside a hippie flying for half the price. Again, others led, while TWA followed. * Two-tier wage scales, which paid new employees of old-line airlines the same lower wages that upstarts like People’s Express were paying. American pioneered; TWA again lagged.
* Hub “fortresses,” in which an airline dominates a “hub” city with flights to and from “spoke” cities. True, TWA snagged St. Louis in the ‘70s -- but other airlines ran multiple hubs out of bigger-wheel locales, like Chicago, Dallas and Atlanta. * Inland starts for international flights. American, for example, could fill a twin-engined 767 for a European flight with passengers at such central cities as Dallas. TWA relied on its international passengers to endure the hassle of changing planes to board a jumbo 747 at New York’s Kennedy Airport. * New, more efficient planes. Gradually, TWA’s fleet aged into the oldest flown by any major airline. The planes were safe enough, but the fuel and maintenance bills grew ever more frightful. In 1983, TW Corp. decided to spin off its ailing airline. The value of TWA’s stock sagged below the airline’s net worth, and the wolves began to gather. Icahn takes the controls. First in line stood Frank Lorenzo. He had started with tiny Texas International and then grabbed up Continental, and later Eastern. Lorenzo flew Continental into bankruptcy -- on purpose, so he could void its union contracts. TWA’s executives knew that some corporate raider would grab TWA, and they leaned toward Lorenzo. Their reasoning: Unlike the other raiders, Lorenzo was at bottom an airline man. He’d treat TWA as an airline, not as a Christmas tree laden with candy-cane assets to pluck off. But TWA’s unions dug in their heels. Anybody but Lorenzo, they said. They got Carl Icahn. In fact, they all but seduced Icahn by offering him, and him alone, contract concessions. In return, corporate raider Icahn promised to keep TWA intact -- indeed, to grow it with new airplanes. But soon enough, the workers soured on Icahn. In spring 1986, his flight attendants struck. Icahn simply hired low-wage subs. For several months, the newcomers learned on the job, bumbling their way through. Icahn loved it; after all, the newcomers cost less. He never seemed to care that above all, an airline sells service. One flight is largely like another; all that sets them apart is the level of service. A fumbling flight attendant or a surly ticket agent can bleed an airline of passengers. Icahn made war on his own workers. In turn, the workers took it out on the only people they could -- the passengers. Abroad, a string of terrorists targeted TWA, long a symbol of the United States. Passengers started to shun TWA. But in the short run, Icahn made money. Early in 1988, he boasted that he had turned TWA around. Still, he invested none of the profits in airplanes -- unless you count the 50 small jetliners he picked up when he merged plucky little Ozark Air Lines into TWA in 1986, giving himself a lock on St. Louis. Instead, Icahn moved money around with the slick sleight of hand that gave the ‘80s such a bad name. In the end, he would claim that he lost millions on TWA; others would insist that he drained TWA to invest in other ventures, then walked away with hundreds of millions. At any rate, Icahn loaded TWA with debt, and the interest alone was a killer. When the balance sheet slumped, he horrified TWA’s unions by selling off prime assets -- gates and landing slots at Chicago’s O’Hare, for example, and priceless routes to London’s Heathrow Airport, the hub for much of the world. In 1992, after TWA filed for a prepackaged bankruptcy, the airline came close to collapse. Pilots and machinists averted it by coming to terms with TWA. But as part of the deal, Icahn had to go. He cashed out early in 1993, leaving the airline in the hands of its creditors -- and its employees. Then-U.S. Sen. John Danforth, an old foe of Icahn, hailed the change by saying: “People who believe in the airline are going to be running the airline. You really respect them for what they’ve endured and the spirit that is theirs.” As for Icahn, aviation writers Barbara Sturken Peterson and James Glab summed him up this way in their book, “Rapid Descent”: “He lurched from one idea to the next, with little regard for their eventual impact on the company. Under regulation, Icahn might have been saved from himself. But a regulated airline would have held no interest for the likes of Icahn.” Ascent and descent: The new employee-owners had their work cut out for them. As investment analyst Glenn Enge told the Associated Press, “The brand name TWA is well-known -- but that doesn’t mean it’s well-liked.” Still, TWA workers started smiling in front of the passengers again. They had some good reasons: * The company packed up its papers and moved its headquarters to St. Louis from Mount Kisco, N.Y., near Icahn’s home in the suburbs of New York. * In November 1993, the company emerged from 21 months of bankruptcy, its debt load a lot lighter. * In March 1995, 23 businesses in the St. Louis area kicked in millions in advance for 110,000 TWA tickets -- a vote of confidence in St. Louis’ hometown airline. * That summer, TWA boosted its daily departures from Lambert Field to 348, a record. * Another trip into bankruptcy -- one carefully planned beforehand -- lasted only eight weeks, ending in August 1995. * Early in 1996, TWA announced plans to lay hands on new Boeing 757 jets -- a step officers hailed as a signal that the lean years were behind. It came to a head on July 17, 1996. That’s when the company proudly announced a profit of $28.5 million for the second quarter -- its best showing since 1989 and a sign of better times to come. A few hours later, a TWA 747 went down in flames. So did the optimism. The plane, Flight 800, blew up off Long Island, shortly after taking off for Paris from New York’s Kennedy airport. All 230 souls aboard perished. Was it a terrorist bomb? An antiaircraft missile? A structural failure? Months of investigation pinpointed the central fuel tank as the site of the blast but failed to pin down a cause of the blast. Some people began to wonder whether TWA would suffer the fate of Pan Am. Shortly before Christmas in 1988, a terrorist bomb blew a Pan Am 747 out of the sky over Lockerbie, Scotland, killing 259. Before long, Pan Am folded (although the name now flies with a small airline). The loss of Flight 800 jarred TWA’s corporate structure. Three months after the plane went down, Jefferey H. Erickson said he was quitting as the airline’s president -- thus continuing the managerial merry-go-round. Within days, TWA announced that it had lost $14.3 million in the year’s third quarter -- the only major airline to post a loss. The bad news bled over into the new year. In January 1997, the airline cut way back on domestic flights out of Kennedy, suspended service from New York to Frankfurt and Athens, and said it would ground many of its 747s. The surgery pained its pride. But TWA said its international operations out of Kennedy were draining the profits run up by its domestic operations in St. Louis. The pride took a few more painful hits in short order: * Tiny Transaero, a Russian airline with a handful of planes, said it was considering buying TWA.
* For the third straight year, Fortune magazine listed TWA as “least admired” among 431 corporations. The final chapter: For a time, TWA seemed to shed drag and gain lift. The company put its creaky fleet of jumbo jets out to pasture. Brand-new jets -- smaller and more efficient -- started flying in TWA’s brand-new paint scheme. Starting in 1997, TWA watched the clock more closely. From way back in the herd, TWA jumped to the top as the industry leader in on-time arrivals. Newspaper stories regularly quoted airline analysts as saying that TWA had taken off and was headed in the right direction. But -- like Flight 800 -- TWA never finished the trip. Among the bugaboos: * An ugly sickout by flight attendants in the Christmas rush of 1998. In a season of good will toward men, passengers carted off ill will toward TWA. One called the airline’s employees “impressive in their apparent desire to commit mass suicide.” * Competition from ex-owner Icahn. As part of his buyout deal, Icahn got the right to buy big blocks of TWA tickets at wholesale and sell them at retail. Not only was the deal a running financial sore, it also gave TWA the shabby image of the poor man’s discount airline. * Confusion over what kind of airline TWA wanted to be. For a time, TWA courted high-end business travelers with a passion. But the strategy fell short. TWA’s sudden affection for the high end priced out many of the low-end leisure travelers who usually filled so many seats. At the same time, high-end travelers remained wary of TWA. They tended to stick with airlines that had multiple hubs and thus better connections. * Diverging flight paths for costs and revenue. Try as it might, TWA could never bring its glory-day costs in line with its sorry-day income. A poor credit rating meant that TWA paid dearly for its aircraft leases -- and couldn’t afford the hedge contracts that let other airlines ride out upward spikes in the price of fuel. TWA went into 1998 hoping to turn a profit, no matter how paltry. After all, other airlines were enjoying a record year. But TWA lost $120 million-- its 10th straight year of red ink. Some airline analysts said TWA could muddle through. They likened the airline to a homeowner with a second mortgage and a heavy credit-card debt. Although he’s in trouble in the long haul, he can keep his head above water for now if he can stay current with his bills. Others were less chipper. After the 1998 numbers came in, another analyst said: “We’ve just had the two strongest years ever in the airline industry. They shouldn’t have had a loss of this magnitude.” It couldn’t go on. After United Airlines cozied up to US Airways in a merger deal last May, the sky darkened for marginal operators like TWA, by now America’s eighth-ranked airline. TWA President Bill Compton spoke bravely in June of the airline’s fixing itself. But just about that time, fuel prices bumped up again. By year’s end, the stock market had lost all faith in TWA. Late last month, the share price fell to $1.02 -- down about two-thirds from where it had started the year. So the news this past week that American Airlines will swallow TWA was marked by sadness, but not by surprise. TWA had probably flown on longer than market economics gave it the right to, thanks largely to employee sacrifices at contract time. Now, the red-and-white birds and the proud name will disappear, like Eastern, Braniff and Pan Am. Still, out in Kansas City, there’s a beautifully restored Constellation painted in TWA colors. Maybe that museum-piece Connie will survive, with the ghost of Howard Hughes in the cockpit.
In this bottom-line age, we can use its touch of glamour.
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