MANAGEMENT: New Course for TWA

Strolling through the terminal at London Airport recently, ex-Navy Secretary Charles Thomas, 61, now boss of Trans World Airlines, was approached by a TWA captain. Blurted the captain: “I just wanted to thank you for turning a losing team into a winning one.” Charlie Thomas shared the captain’s relief. When he took over as president and chief executive officer of TWA just a year ago, the line was flying low and slow; it had operated without a president for six months, had lost close to $12 million. Last week TWA was back to cruising altitude, thanks not only to Thomas but to the astonishing success of its jets and the upsurge in all air traffic.

Despite a $3.8 million loss in the first quarter, TWA reported first-half earnings of $1.6 million, expects “better than substantial” profits for the year v. a $1.8 million loss last year when it was in the worst position of any major U.S. airline (TIME, Dec.1). This week TWA, which received its jets after competitors American and Pan American, will add jet service to Philadelphia and Kansas City, bringing to ten the number of cities that its jets serve. TWA benefited from break-in bugs that other lines have found in Boeing 707s (TIME, June 8), which helped it maintain a topflight, on-time performance, with 80% of its jets departing within ten minutes of schedule.

92% Full. Even more impressive for the balance sheet is TWA’s jet load factor of 92%, which helped hike the line’s domestic-revenue passenger miles 5.7% over July 1958. While total revenues rose from $280 million to $307 million for the year ended June 30, operating expenses have stayed level because of the reorganization of the line and staff cuts started by Thomas’ predecessor, Carter Burgess, and continued by Thomas.

TWA still has problems. Its international division, which does not yet have jets, is expected to operate at a loss this year. Thomas denies that TWA is about to sell the overseas business, an industry rumor prompted by a plan to transfer to Pan American six long-range Boeing jets (cost: $40 million). Thomas has found that one 707 will do the work of three piston planes (instead of two, as originally expected), is willing to sell to Capital Airlines six Convair 880 medium-range jets, on order for TWA. The sale would relieve TWA’s eccentric owner, Howard Hughes, of a $21 million bill; he would still have to raise an estimated $200 million to pay for 37 jets still on order.

September Deadline. So far, TWA’s 14 Boeing 707s are being operated on a stopgap, short-term leasing arrangement with Hughes Tool Co. Hughes will be pressed to decide by Sept. 30, when the lease arrangement expires, if he will raise the money to complete payment on the jets by a major refinancing of TWA or by other means. Whatever the choice, Hughes and TWA are in a far stronger position than they were eight months ago, when it looked as if Hughes might be forced to give up control of part of his holdings to raise money. Says Charlie Thomas: “The planes will be financed conventionally and soundly without Hughes’s losing any significant control.”