Trans World Airlines—Dawn to Dusk, Part II
Howard Hughes plays a major role in T&WA equipment modernization, which contributes greatly to T&WA’s post-war expansion, interrupted by the consequences of economic recessions, fuel shortages, deregulation, and corporate manipulations.
Air Line Pilot, October 2001, p. 18
By Esperison Martinez, Jr. Contributing Editor
(Part I discussed T&WA’s transcontinental beginnings, its early passenger and mail history, and its role in introducing the DC-1, which brought new design concepts, improved performance, and profits to the airlines.)
T&WA, by virtue of its government-awarded Los Angeles-to-Philadelphia transcontinental route during the 1934 airmail contract proceedings, became one of the Big Four U.S. airlines, along with United, American, and Eastern. T&WA also gained a new president, Jack Frye, who was named in December 1934 and departed 12 years later, in 1947. His leadership moved T&WA pilots from two- and three-engine airplanes into pressurized cockpits and the renowned four-engined "Connie," while positioning the carrier to span the globe.
T&WA’s move from the twin-engined Douglas airliners to the Boeing 307 Stratoliner was significant for two historical reasons: The move signaled development of the world’s first pressurized commercial air transport, and Howard Hughes would gain control of the airline, which would benefit greatly from his progressive thinking.
Frye firmly believed that airline success would come only when passengers were carried comfortably, and that meant flying above the weather. To this end, he turned to Capt. "Tommy" Tomlinson, who had already set U.S. and world aviation records and had conducted thunderstorm research in T&WA’s venerable, but modified, DC-1.
Flying a T&WA Northrop Gamma, modified for extremely high altitude research, Tomlinson discovered the jet stream, among other high-altitude flying findings. Upon landing after a high flight, he told meteorologists, "My God! I had winds of 100 to 150 miles per hour"—an astounding discovery and adventure in that day. Capt. Tomlinson’s research shows T&WA’s bent for advancing the technology that shaped commercial aviation and the airline dependence on its pilots to succeed.
From this research came the impetus for developing the Stratoliner, to fulfill T&WA’s desire for a four-engine transcontinental transport with a pressurized cabin. Boeing, owing to some of its own preliminary works, had sketchy plans available. Negotiations went quickly and smoothly, and on Jan. 29, 1937, T&WA ordered five Boeing 307 Stratoliners, with delivery of the first set for Dec. 22, 1938.
Between the time T&WA placed the Stratoliner order and Boeing’s promised delivery date, Frye’s vision clashed with the practicality of T&WA’s major stockholder, John Hertz (yellow cab and rental car mogul), who believed the price of the new airplane, which Frye saw as T&WA’s future, was too much for the financially strapped airline. The dispute caused problems with the delivery, and the order was cancelled.
Enter Howard Hughes
Frye then turned to Howard Hughes, who, sensing a major opportunity, surprised onlookers and bought enough shares to gain control of the company.
The Stratoliner contract was resurrected in September 1939, and delivery of the pressurized, all-weather airliner was made on May 6, 1940, with the inaugural flight following on July 8, 1940. Pan American had already taken delivery of its order for four Stratoliners and had begun using them in June on routes to South America.
After T&WA’s shakedown period with the Stratoliner, it proved popular with passengers and dependable and reliable throughout its commercial service, which was to be short-lived.
At the onset of World War II, the largest U.S. airlines were pressed into military service via contracts to transport men and supplies. On Dec. 24, 1941, T&WA was signed to provide Army transport needs to any place in the world. The airline sold its five Stratoliners to the government and formed its Intercontinental Division (ICD) to operate within the Army Air Forces. The ICD would be the nucleus of what would become the Air Transport Command. Eventually, T&WA pilots would also fly a fleet of C-54 and C-87s that the government procured. According to T&WA pilot records, the ICD effort concluded in April 1946, having amassed 238,741 operational flying hours (179 mph average speed); 9,528 transoceanic flights; a load factor of 84 percent of capacity over 42 million miles, or 235 billion pound-miles; and 44 T&WA lives and nine C-54s lost. The experience during these operations readied T&WA for the transatlantic operations it would begin following the war.
Once the Stratoliner situation with Boeing had been settled, Howard Hughes’s vision turned toward more-advanced, larger, and faster airplanes, talking with Frye about future equipment even before the first Stratoliner was delivered. The new airplane would be big—carrying 50 passengers and 6,000 pounds of cargo, it would be fast with over-weather capabilities, it would be luxurious, and it would fly across the continent nonstop. But most importantly, all talk and plans pertaining to it would be highly secret.
Many meetings with Lockheed contacts resulted in an order for 40 Constellations at a cost of $425,000 each to be bought by the Hughes Tool Company, as would be all future aircraft purchases. Announcement of the Constellation program, which had managed to stay a tightly held secret, just a few months before Pearl Harbor caused a sensation within the aviation industry. But T&WA was not to immediately reap the rewards of its marvel; war needs prevailed. All Constellations that came off the assembly line were designated C-69s and went into military service.
However, the airline did accept the first Constellation, dressed in T&WA livery, and after its acceptance flight, turned it over to the military. The acceptance flight—Burbank to Washington, D.C.—was a record-maker. On April 17, 1944, Hughes and Frye flew the cross-country trip in 6 hours 58 minutes. Although the Constellation was to have given T&WA a healthy 3-year lead over its competitors in operating the highly sophisticated transport, the war eliminated that possibility. Owing to the "Connie’s" transport configuration, the government gave production preference to combat aircraft, so that Lockheed manufactured only half of T&WA’s original order for 40. Hughes had contracted to retain buy-back rights from the government, so at the war’s end, a sizeable fleet returned to T&WA.
On July 5, 1945, T&WA gained temporary authority to serve Paris, Rome, Athens, and Cairo, finally placing the Constellation into commercial service on Feb. 5, 1946, when it made the first commercial flight from Washington, D.C., to Paris, via La Guardia. Capt. Hal Blackburn commanded the crew of co-captains Jack Hermann and John Calder, flight engineer Art Ruhanen, plus a navigator, a radio officer, and two cabin attendants. On February 15, the inaugural Los Angeles-to-New York flight became reality.
Several events hurt T&WA’s operations and precipitated a drop in T&WA stock price from $71 a share to $9, along with a loss of $4 million in 1946. The 18 Constellations on order were cancelled. The T&WA Board of Directors voted Jack Frye, ever the visionary, out of office. Although the company was experiencing equipment, financial, and labor problems, Frye wanted to buy more Constellations; Hughes and the Board did not. In early 1947, Douglas introduced the DC-6, which proved to be serious competition to the "Connie" fleet. But the next year, T&WA placed a new-model Constellation, the L-749, into service.
In 1950, the carrier officially changed its name to Trans World Airlines (TWA), and its bottom line improved, owing mainly to the success of its international division and increased transcontinental traffic. TWA later replaced its short-haul fleet of DC-3s with Martin 404s and 202As. For its transcontinental and international routes, TWA on April 1, 1955, introduced the L-1049G to compete with the Douglas DC-7, which United and American were flying.
For 25 years, the elegant, streamlined Connie, with its distinctive triple tail and long fuselage, dominated TWA skies. The airplane underwent much modification, culminating in what has been referred to as the "most luxurious piston aircraft," the L-1649A. The last TWA Constellation flight, Flight 249, took off from Kennedy Airport at 3:15 p.m. on April 6, 1967. The crew of Capt. Joseph Duncan, First Officer Richard Green, and flight engineer George Martin closed a chapter of TWA aircraft history as TWA prepared for the commercial jet transport.
Just as the Douglas series of transports, the Boeing Stratoliner, and the Lockheed Super Constellation had played such vital roles in TWA’s development during the piston-engine era, the jet-engined Boeing 707, 727, and 747, along with the L-1011 and the DC9/MD 80, would become the airline’s vital equipment in years to come. During the 1950s, 1960s, and through the early 1970s, TWA further developed its first-class character for which it will long be remembered. The carrier would acquire airlines and international routes that spanned the globe, its pilots would set many aviation records, and its safety record would be second to none.
But all that was not entirely evident from the Boeing order pad for the first American commercial jet transport, the Boeing 707, which showed 186 aircraft ordered by the nation’s airlines, except for TWA, whose order tallied "0." This was not for lack of interest. Howard Hughes continued to dominate TWA and its planning and equipment procurement. He was working with Convair to develop a jet larger and faster than the B-707; the deal collapsed at about the same time that his company, Hughes Tool, which bought all of TWA’s airplanes, suffered a serious cash flow problem that was not publicly evident. Ironically, TWA was earning good profits.
Hughes’s resistance to ordering the B-707 wilted; and on March 2, 1956, he allowed an order for eight "domestic" B-707s to be placed; his executives were aghast at the meager number and aircraft type. Ultimately, the order was increased to a total of 33 as of Jan. 10, 1957. On March 20, 1959, TWA inaugurated jet transcontinental service from San Francisco to New York with its single Boeing 707, almost 2 months after American’s B-707 coast-to-coast flight on Jan. 25, 1959. The first TWA B-707 flight over the Atlantic was on Nov. 23, 1959. In that year, TWA experienced its best financial year to date.
The Convair 880 was brought on line in 1960 to supplement the long-range B-707. The CV-880 was faster than either the B-707 or its competitor, the DC-8, and helped TWA pilots set many city-pair speed records. The jets’ voracious thirst for fuel, however, caused TWA to sell them in the early 1970s.
In the meantime, Howard Hughes’s financial problems with Hughes Tool had deteriorated to the point that on Dec. 29, 1960, his financial backers placed his TWA stock (78 percent of all company stock) into a 10-year voting trust, repossessed all the aircraft, and ousted Hughes from control of the airline. By 1965, TWA’s value had zoomed up, and its stock was again in the range of $97 per share. The airline had revenues exceeding $500 million and a profit of $50 million, and paid its first dividend to stockholders in 30 years. Hughes sold his holdings for $550 million and cut his last ties with the airline.
The upswing of TWA’s fortunes at this time is attributed to Charles Tillinghast, a Wall Street lawyer and former Bendix executive who was named TWA president in May 1961. His acumen was to TWA’s business growth what Lindbergh, Frye, and Hughes’s acumen had been to TWA’s aeronautics growth. Tillinghast guided the airline to attaining financial success it had never before reached. By 1969, TWA earnings reached more than $1 billion in sales; revenues quadrupled over 1958 rates, and the number of employees tripled.
This startling success is tied to the thought and planning that went into developing its jet fleet, workforce, and routes. On Oct. 1, 1962, TWA inaugurated the first fully automated doppler radar system of navigation on scheduled transatlantic flights—the New York to London flight was the first transatlantic flight ever operated without a professional navigator aboard.
TWA began its B-727 service on June 1, 1964, and started replacing its short-haul airplanes with the DC-9. By the late 1960s, the TWA fleet of B-727s had grown to 50, with more on order. International expansion was on the upswing, with service reaching several African countries, and with the airline securing Pacific authority and engaging in around-the-world flights. The most telling mark of TWA’s growth is that in July 1969, it took the spot as top transatlantic carrier away from Pan American for the first time. The B-727 was looked upon as the "savior of TWA."
The change from pistons to jets and the surge of hiring had an effect on the pilot force as well. To meet the challenge, TWA established the Jack Frye International Training Center in Kansas City. Dedicated on April 26, 1962, the Center employed more than 240 people and was equipped with six state-of-the-art simulators. The Center task was formidable because from 1963 to 1965, TWA added 600 new pilots, and 640 flight engineers also went into pilot training. In addition, pilots needed 7 weeks of training to make the transition from pistons to jets. The retraining included 21 days of ground training and 10 days of simulator work.
TWA, when it retired the Constellation fleet in 1967, became the first U.S. airline to boast an all-jet fleet. At the end of 1969, TWA’s fleet consisted of 232 airplanes: 124 B-707s, 64 B-727s, 25 CV-880/890s, and 19 DC-9s. And that fleet would grow. On Feb. 25, 1970, the carrier inaugurated B-747 service from Los Angeles to New York, becoming the first to offer any B-747 service in the United States. Two years later, on June 25, 1972, TWA began L-1011 service and flew the first flight, St. Louis to Los Angeles, on autopilot from takeoff to landing.
But the 1970s were not to be all golden. Along with the rest of the airline industry, TWA would experience hijackings, which began in 1968; the ill effects of an economic downturn; the oil embargo of 1973 to 1979; labor strife; and the deregulation of the U.S. airline industry, which over a prolonged period would change the face and character of air travel.
The airline industry and particularly the pilots were fighting an uphill battle to overcome the menace of hijacking, which by 1972 had reached 160 recorded U.S. airplane hijackings. They started as political hijackings, with most destined for Cuba. TWA had three airplanes commandeered and directed to Cuba during 1968 and 1969.
Worse was yet to come—terrorist hijackings, which had been renamed "skyjackings." On Aug. 29, 1969, a commando unit of the Popular Front for the Liberation of Palestine (PFLP) skyjacked TWA Flight 840 enroute from Rome to Athens. An armed duo ordered Capt. Dean Carter, First Officer Harry Oakley, and Second Officer Hobart Tomlinson to fly to Damascus. Once there, the terrorists released the passengers and crew and blew up the airplane. A few weeks later, the PFLP hit again, taking six airliners. Terrorists took over TWA Flight 741, a B-707 flying from Tel Aviv to New York, and directed it to land in the desert near Amman, Jordan. Three other hijacked airplanes were forced to the same point. In all, 595 passengers and crew members were kept aboard their airplanes for some time, until removed, and then the skyjackers blew up all the airplanes.
TWA Capt. Tom Ashwood, as an ALPA national officer, was highly instrumental in the U.S. and international effort to solve the hijacking menace. The United States finally passed the Antihijacking Act of 1974, which put into effect many of the security measures still used today.
Although the fear of being skyjacked may have deterred some air travelers, the real cause of low load factors during the 1970s was the depressed economy and severe fuel shortages, coupled with overcapacity. Interestingly, the introduction of the B-747 at such a financially precarious time was reminiscent of TWA’s introduction of its DC-1 during the Depression. TWA’s fleet of 232 jets, coupled with delivery of widebody jets at a time when many small carriers and fleets were being restructured or established, helped create tremendous overcapacity and traffic stagnation as the traveling public was sharply reducing its air travel.
The carrier’s bottom line began to get worse, and TWA pilots suffered heavy furloughs—700 pilots were on the street at the end of 1971, a number reduced by only 123 by 1974. Looking for a way out of its financial hole, TWA exchanged routes with Pan Am in 1974 and dropped its around-the-world service along with some other routes.
By 1976, the carrier had financially begun to reach level flight and recalled all its furloughed pilots; but the pilot hiring hiatus that began in 1970 lasted until 1978, when the airline hired 12 pilots.
The next year, 1979, the air carrier’s identity started to become clouded as it became part of a new order: The Trans World Corporation was formed and included Canteen Corporation, Hilton International (bought in 1967), Spartan Food Service, and Century 21 Real Estate.
TWA’s earnings thus became corporate earnings; and in 1980, TWA contributed more than $3 billion of the $5 billion that the entire corporation earned.
In the same year, drained of its capital, the airline began furloughing pilots again, benching 670 through 1981—the effects of deregulation were setting in.
To stave off a furlough of 200 more, TWA pilots accepted reduced flight hours and pay to 72 hours a month—pilot givebacks would become a constant management demand in future negotiations.
Glide toward dusk
Effects of the unfettered competition that the Airline Deregulation Act of 1978 brought on would touch every major airline, spawn dozens of new small carriers, establish fleets of small airplanes, and create unbearable loads of debt for the larger carriers. The smell of bankruptcy was in the air. Braniff was the first large airline to fall under the heavy debt brought on by expansion. It declared bankruptcy on May 12, 1982. Others, such as Eastern Airlines followed; TWA would not be forced to file for reorganization until Jan. 31, 1992.
But during those 10 years, the carrier underwent a massive upheaval in its organizational structure, financial outlook, route structure, and workforce.
In 1982, TWA began operating new widebody equipment and made its first transcontinental Boeing 767 flight, Los Angeles to Washington, D.C.
Debt brought on by equipment purchases, rising fuel prices, fare wars, and instability were the plague of the time, and in November 1983, TWA was cut away from the corporate "family" to fly on its own as a new public company.
By 1985, TWA was on the brink of collapse, and Frank Lorenzo was bidding for the airline.
To thwart the "scourge of labor," TWA’s unions backed Carl Icahn’s 52 percent purchase of the company on September 26. This was the midst of the "Go-Go 80s," when the Reagan Administration’s laissez-faire pro-business policy encouraged Wall Street junk bond dealers and corporate raiders, among others. TWA acquired Ozark in September 1986 and recorded profits for 1987 and 1988, when Icahn bought another 23 percent of TWA and convinced the stockholders to take the company private. The process took some $610 million out of TWA, earmarking $469 million in cash, and $196 million in preferred stock for Icahn; and more than $539 million was added to TWA’s debt. By now, the unions fully recognized Icahn as a "corporate raider" and no longer backed his ownership, comparing him to Frank Lorenzo.
The Gulf crises that began in 1990 made TWA’s debt of $2.8 billion totally unserviceable out of operating income. Within 6 months, TWA’s cash was gone.
Icahn was battling fare wars; demanding large givebacks from pilots and other labor; and selling valuable assets, including route authority from New York, Los Angeles, Boston, and Chicago to London to American Airlines for $445 million in July 1991 and the Philadelphia and Baltimore routes to London to USAir for $50 million in May 1992.
On Jan. 31, 1992, TWA filed for Chapter 11 bankruptcy protection from its creditors.
TWA’s total workforce had made clear that any "givebacks" would happen only if Icahn left. On Aug. 24, 1992, creditors agreed to give employees 45 percent equity in TWA for concessions of 15 percent. The following January, Icahn resigned, relinquishing all control and interest, but taking away with him a deal that allowed him to buy blocks of discounted TWA tickets and resell them through his Internet website, a deal that would come to haunt TWA’s future financial stability.
On Nov. 3, 1993, TWA completed its reorganization and selected William R. Howard as chairman of the Board and CEO. In April of the following year, Jeffery H. Erickson was named president and chief operating officer.
In 1995, TWA successfully completed a second financial reorganization.
In February 1997, Gerald L. Gitner was named chairman and CEO, and on Dec. 3, 1997, Capt. William F. Compton was named president and COO, putting a pilot back into control of the airline after a long line of business executives. Capt. Compton became president and CEO on May 25, 1999.
For the seemingly ageless airline, the 1990s proved a rocky decade. Its flight operations continued as did innovations in passenger services that brought praise from airline industry publications. About the time that the second financial reorganization was completed, in mid-1995, TWA added a distinctive new aircraft livery. As if its new livery signified a fresh start, the carrier made it first new aircraft buy since before the Icahn days, ordering 20 new B-757-200s on Feb. 12, 1996, and 5 months later, 15 new MD-83s.
Two significant equipment events marked 1998:
* on February 20, the last of TWA’s Boeing 747s was retired; and
* on December 9, TWA placed its largest aircraft order in the company’s history—125 B-717s and A319/A320/A321s, plus options for 125 more.
The B-767 widebody had become the airlines’ main international aircraft. But 1999 ended with a $353 million loss and the distinction of TWA’s being the only large airline not to turn a profit that year. Indeed, TWA had not turned a profit since 1988.
The first three quarters of 2000 produced a $115.1 million loss, and in January 2001, Standard and Poor’s Credit Watch noted that TWA remains "vulnerable over the longer term because of its limited route structure, weak financial profile, and lack of significant alliances with other airlines." In the preceding 12 months, TWA stock shares lost 55 percent of their value and stood at $1.32 per share at the time of the S&P report.
Clearly, the financial lot of TWA made turning the company around impossible for the newly appointed pilot CEO. But on the operations side, the employees, following Capt. Compton’s management, did improve the performance in the air: TWA flew a record 26.4 million passengers in 2000 with high customer satisfaction and consistent on-time completion rates. With liquidation a near certainty, the airline refused to be buried. On Jan. 10, 2001, Capt. Compton announced: "TWA voluntarily filed petitions in the U.S. District Court in Delaware for relief under Chapter 11 of the US. Bankruptcy Code. American [Airlines] will purchase TWA’s assets out of bankruptcy and ultimately will integrate the TWA system into its own."
Thus, dusk has descended upon the familiar TWA livery recognized in so many parts of the world and by the many people whose lives it has touched. TWA leaves the national aviation scene in much the same way it came in: A marriage of airlines during a weak economy marked by an unregulated environment that sports unbridled competition and with a pilot in command of its operations, directing a stalwart workforce and a resolute pilot group flying an improving aircraft fleet.
All TWA pilots, the glue of the venerable carrier, will carry memories of their airline, the glorious ups and the dismal downs it has experienced; the unselfish giving of the "brotherhood" to help correct errant financial paths; the pride, professionalism, and character that labeled it "A Pilot’s Outfit."
To them, its spirit will always live as "Go TWA!"