Air Transport World

'Today's TWA' flying to the black. (Transworld Airlines)

"Today's TWA' flying into the black

There is an old folk tale about this wealthy merchant who married a poor but proud beauty. Fearing that his wealth would turn her pride into arrogance, he insisted that they spend their honeymoon as beggars. Penniless, dirty, dressed in rags, sleeping in the fields, they trudged from village to village wheedling for a crust of bread. After a week or so, as he watched his beautiful bride drag her weary body along, slowly being transformed into a crone, he began to question his own wisdom. Many times he thought of cutting short her ordeal. At last the time was up. "My dearest wife,' he cried, "I'm deeply ashamed to have put you through this ordeal. Let's hurry home this instant and let me dress you in the richest silks, as you deserve, and bedeck you with pearls and diamonds. Never again will I subject you to such humiliation.' She was shocked. "Not yet, dear husband,' she replied. "Can't you see that there are six or seven houses in the village that we still ought to work?'

Could this tale be symbolic of Carl lcahn and his marriage to TWA? It was widely believed, and is probably true, that when the corporate raider went after ailing TWA his intention was to sell off its parts and walk away with a profit as quickly as possible. Wall Street was saying, "Carl doesn't really want to run an airline; he just wants to turn a fast profit on his investment.' But in order to get labor to support his bid over that of Texas Air Corporation's Frank Lorenzo and to agree to cooperate in cost-cutting measures, Icahn promised the pilots he would keep the airline intact for at least two years.

Now, almost two years later, having weathered titanic storms such as the flight attendants' strike and the impact of terrorism on transatlantic travel, Icahn gives the impression of actually enjoying the experience of running an airline. Like the bride in the story, he has apparently gotten to like the challenge and wants to continue to work on houses in the village.

Well, maybe. When Icahn disrupted USAir's bid for Piedmont with a bid of his own for USAir and the suggestion he might also like Piedmont in addition, he also proposed, according to Edwin Colodny, chairman of USAir, that an acceptable alternative would be for USAir to buy TWA. Colodny turned him down, the USAir-Piedmont deal went through, and TWA was left out in the cold.

Growth moves

Whatever his ultimate goal, there is no question that since he gained control of TWA Icahn has moved to enlarge the airline and move it solidly into the black. If his aim is to sell, he wants to be able to offer a very attractive piece of merchandise to the buyer. Even the sale of a half interest in TWA's PARS automated reservations system to Northwest (for a gain of $140 million) can be seen as a growth move rather than a divestment move. Aside from bringing in a healthy infusion of capital, it will enable TWA and Northwest to enhance PARS and compete better with American's Sabre, United's Apollo and Texas Air/Eastern/Continental's SODA systems.

At the time Icahn announced the acquisition of Ozark Air Lines in 1986, which was to provide a shot-in-the-arm as a feeder to TWA's domestic hub in St. Louis and in one stroke add 50 twin-jet McDonnell Douglas DC-9s to TWA's fleet, he made no secret of his desire to buy one or more other airlines. In the era of megacarriers, he acknowledged, the watchword has to be grow or die. At the time, he said he had a kitty of close to $1 billion available for purchases. But if, as Dickens said, Barkus is willing to get hitched, the feeling thus far has not been reciprocated by prospective brides. With the failure of the proposal to USAir, the field of prospects is now quite limited, if it still exists at all for TWA. If this is true, then TWA's growth must come from within, and this is the path Icahn and his team is now following.

The team is a mixture of new and old faces. …

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