You know, I was standing in the security line
at the airport the other day, shoes in one hand,
laptop in the other, shuffling forward in my
socks on that gray industrial carpet. And I looked
around at the fluorescent lights, the plastic
bins, the tired faces, and I just thought, this
is a bus station. It is. It's effectively a logistics
processing center. That is what modern air travel
has become. It's all about efficiency, volume,
throughput, and safety. It is completely utilitarian.
Exactly. It's just a means to an end. But the
reason we're here today... And the reason I pulled
this massive stack of history books, financial
reports, and old flight manifests is because
it wasn't always like that. There's a specific
window in the 20th century where an airline wasn't
just a company. It was a vibe. It was a cultural
icon. And at the absolute center of that universe
was TWA, Trans World Airlines. The Airline of
the Stars. The Airline of the Stars. And that
is not just some marketing fluff. We're talking
about an airline that was... owned by Howard
Hughes, arguably the most eccentric, famous billionaire
in American history. We're talking about terminals
that look like sculptures from the future. We're
talking about a brand that effectively taught
America how to be global citizens. It was for
a very long time the gold standard. For a large
part of the mid -20th century, TWA was effectively
the second unofficial flag carrier of the United
States, right there alongside Pan Am. If you
were flying internationally in the 1950s or 60s,
you were likely on a TWA Constellation or a 707.
It really did represent the projection of American
soft power abroad. And yet, and this is the hook,
this is the real tragedy we have to unpack today.
This company, which was founded by aviation pioneers
and owned by the richest man in the world, ends
up being sold for parts. He goes from the Lindbergh
line to a financial carcass picked clean by corporate
raiders in the 1980s and 90s. How does that happen?
It's a dramatic, almost Shakespearean rise and
fall. And what we're going to do in this deep
dive is trace that entire arc. Because TWA isn't
just a story about planes. It's a case study
in the tension between radical engineering innovation,
massive celebrity power, and eventually just
brutal, brutal corporate finance. We have a massive
stack of source material here to get through.
We've got the corporate histories, the fleet
manifests, the NTSB accident reports, and the
bankruptcy filings. We're going to go through
it all. We're going to cover the glory days,
the engineering breakthroughs that honestly changed
physics, the fatal mistakes in the border. room,
and of course, the tragic final chapters. So
let's rewind all the way back. Because TWA didn't
start as TWA. It wasn't one guy with a dream
in a garage. It was more like a shotgun wedding,
wasn't it? It absolutely was. A forced marriage.
To understand the birth of TWA, we have to look
at the year 1930. And honestly, to understand
early TWA, you have to understand the male. The
male. Like letters. The U .S. mail. In 1930,
the airline industry wasn't really about passengers.
Passengers were heavy. They complained. They
got air sick. They needed bathrooms. Mail sacks
did not. The lifeblood of early aviation, the
only thing that made it profitable was government
airmail contracts. And the man holding the purse
strings was the postmaster general, a guy named
Walter Folger Brown. OK. Walter Folger Brown.
So he's the puppet master here. He's the puppet
master. Brown had a vision. He looked at the
map of the United States. And he saw this patchwork
of tiny, struggling airlines flying open cockpit
biplanes. It was chaotic. It was unreliable.
He didn't want chaos. He wanted stability. He
wanted three main transcontinental routes, a
northern one, a central one, and a southern one.
And he wanted big, robust corporations running
them. So he didn't just ask nicely for them to
consolidate. Now, he leveraged something called
the Air Mail Act of 1930, also known as the McNary
Watchers Act. He effectively forced a merger.
He took a company called Transcontinental Air
Transport, or TAP, merged it with Western Air
Express, WAE, and then threw in a few smaller
outfits like Maddox Airlines. He basically called
them all into a meeting, which later got called
the Spoils Conference, and said, if you want
the lucrative central air mail contract, you
are now one company. You are now Transcontinental
and Western Air, TWA. Exactly. And while it was
a forced marriage, you have to look at the DNA
of the parents. It was spectacular. Let's look
at TAT. They were already marketing themselves
as the Lindbergh line. Charles Lindbergh, as
in the Charles Lindbergh, the spirit of St. Louis.
The one and only. Lindbergh was a technical advisor
for TAT. He had actually surveyed the routes
himself, having his name attached to your airline
in 1930. It's hard to overstate. It would be
like having, I don't know, the most famous tech
visionary and the most famous pop star launch
a company together today. It was instant credibility.
So you have the celebrity aviator on one side.
Who is coming from the Western Air Express side
of the family? That brought in Jack Fry. And
Fry is a crucial, crucial character in this story.
He wasn't just a suit. He was a pilot's pilot,
a barnstormer, an absolute operations genius.
So right out of the gate. In 1930, you have the
Lindbergh brand and the Jack Fry operational
grit. It was a potent combination. That's immediate
street cred in the aviation world. So they merged,
they have the contracts. What was the product
actually like for a passenger? They wasted no
time. On October 25, 1930, they launched one
of the first all -plane coast -to -coast passenger
schedules. Now, I have to pause you there. When
we say coast -to -coast in 1930... We aren't
talking about a five -hour flight with Wi -Fi
and a movie. Oh, no. We are talking about a 36
-hour ordeal. 36 hours. 36 hours. And that was
considered blazing speed. You have to remember
the alternative was a train that took three to
four days. Right. But here's the real kicker.
They didn't fly at night. Why not? The technology
just wasn't there. No reliable navigation aids,
no lighted runways in the middle of nowhere.
It was just too dangerous. So you would fly all
day from the East Coast, land in Kansas City,
get off the plane. They take you to a hotel.
You'd stay overnight, get back on the plane the
next morning and fly the rest of the way to Los
Angeles. That sounds absolutely exhausting. But
I guess compared to the train, it must have felt
like time travel. It was a revolution. But just
as they're getting started, tragedy strikes.
And this is one of those moments in history that
pivots an entire industry. If this crash doesn't
happen, modern aviation looks very, very different.
You're talking about the Newt Rockne crash? Yes.
March 31st, 1931. TWA Flight 599. It was a Fokker
F -10 trimotor. It crashes in a field near Matfield
Green, Kansas. It kills all eight people on board.
Eight people. Yeah. In today's numbers, that
sounds like a small private plane accident. Yeah.
But one of those people was very, very famous.
Newt Rockne, the legendary, iconic football coach
of Notre Dame. In 1931 America, he was a titan.
This would be like, I mean, imagine if a major
NFL coach or a massive celebrity today died in
a commercial plane crash. The media storm was
intense. The public demanded answers. And what
were the answers? What brought the plane down?
The investigation revealed something terrifying.
The Fokker F -10, like many planes of its era,
had wooden wings. It was a wood structure covered
in fabric and plywood. What had happened was
that over time, moisture had seeped into the
interior of the wing. The glue that held the
wooden spars together had dissolved. It lost
its integrity. So the wing was literally rotting
from the inside out. Exactly. And during turbulence,
the wing essentially just snapped off in flight.
Wooden wings. It sounds insane to us now, sitting
here in the 21st century, but that was the standard,
wasn't it? It was. But the Rockne crash ended
the era of wood and fabric for major passenger
transport practically overnight. The public lost
faith. TWA grounded their entire Fokker fleet.
They were in a serious crisis. They needed a
new plane. They needed metal. So logic suggests
they go to Boeing, right? Boeing is the big manufacturer.
They did go to Boeing. And Boeing had just developed
the Model 247. It was the first truly modern
airliner, all metal, retractable, landing gear,
sleek. It's the future. But there was a catch.
There's always a catch. Boeing was part of a
giant conglomerate called United Aircraft and
Transport Corporation. Guess who else was in
that conglomerate? United Airlines. Correct.
So when Jack Fry and TWA knocked on the door
and asked for the 247, Boeing basically said,
sure, you can have some after we deliver the
first 60 of them to our sister company, United.
Ouch. That is anti -competitive behavior 101.
So TWA is grounded. Their reputation is taking
a massive hit because of the Rockne crash, and
their main competitor has an exclusive lock on
the only modern plane in existence. Right. Backed
into a corner, TWA did something bold, something
that would define the company for decades. Jack
Fry and his team wrote up a spec sheet and sent
it to several smaller manufacturers. They sent
it to a company called the Douglas Aircraft Company.
At the time, Douglas wasn't a huge player in
civil aviation, and TWA gave them a list of demands
that was incredibly ambitious. They basically
said, we need a metal plane that is faster than
the Boeing, carries more people, and most importantly,
can take off on one engine from any airport in
our system. Why the one engine rule? That seems
specific. Safety redundancy, born directly from
the trauma of the Rockne crash. They were flying
over the Rocky Mountains in the high desert.
They specifically mentioned the route from Winslow,
Arizona to Albuquerque, which had some very high
elevations. They needed to know that if an engine
failed over the mountains, the plane wouldn't
just drop out of the sky. So they forced Douglas
to over -engineer it for safety. Exactly. And
Douglas delivered. They built the DC -1 for Douglas
Commercial 1. It was a prototype. Then they refined
it into the DC -2. And eventually they widened
it into the legendary, the iconic, the world
-changing DC -3. And the DC -3, I mean, that's
not just a plane. That's an institution. That's
the plane that changed the world. It changed
the physics of the business. Before the DC -3,
airlines effectively lost money on passengers
and made their profit on mail. The DC -3 was
efficient enough and carried enough people, 21
passengers, that for the first time an airline
could turn a profit just hauling humans. That
is a massive shift. That's the moment it stops
being a government subsidized service and starts
being a real viable business. And the speed.
In February 1934, Jack Fry, remember him, the
pilot executive, and Eddie Rickenbacker, another
World War I ace who was then with Eastern Airlines,
they flew the DC -1 across the country. They
flew from Burbank to Newark in just over 13 hours.
Wait, hold on. Let me get this straight. In 1930,
it was 36 hours with an overnight stop. By 1934,
it's 13 hours nonstop. That is the pace of innovation
we are dealing with. In four years, they cut
the travel time by almost two -thirds. TWA became
the leader in technology and speed because they
were forced to be. Tragedy driving innovation.
It's a recurring theme in this story. So TWA
is recovering. They have these shiny new metal
planes. They are the Lindbergh line. Things are
looking up. But then we hit 1939, and a new character
enters the chat. Very big one. Perhaps the biggest
character in 20th century aviation history. And
again, it starts with Jack Fry wanting a new
plane. He wanted to buy the new Boeing 307 straddle
liners. What was special about the straddle liner?
One word, pressurization. That is the key. Before
pressurization, you had to fly low, usually below
10 ,000 feet. That meant if there was a storm,
you flew right to the middle of the storm. You
bounced around. People got sick. The air sickness
bag was a standard piece of equipment, not a
precaution. Exactly. Pressurization meant you
could seal the cabin, pump it full of air, and
fly over the weather at 20 ,000 feet. It was
smoother, it was faster, it was infinitely more
comfortable. Fry knew this was the next great
leap forward. But the TWA board was conservative.
They looked at the huge price tag and said no.
They didn't want to spend the cash. Right. So
Fry, incredibly frustrated with his own board
of directors, goes to a friend, a fellow aviation
nut with very, very, very deep pockets, Howard
Hughes. The Howard Hughes, the tool company fortune,
the movie producer, the reclusive, eccentric.
Genius. Hughes listens to Fry and he doesn't
just cut a check for the planes. He goes out
and starts secretly buying up TWA stock. He buys
a controlling interest in the entire airline
through the Hughes Tool Company. He effectively
buys the airline so his friend Jack Fry can buy
the planes he wants. That is, that's a power
move. My boss won't let me buy this cool new
toy, so my billionaire friend bought the company.
And suddenly, TWA isn't just a corporation. It's
Howard Hughes' personal laboratory. And this
leads directly to the development of the most
iconic, most beautiful propeller plane ever built,
the Connie. The Lockheed Constellation. And this
is a great story of corporate secrecy. Hughes
didn't just order this plane off a catalog. He
and Jack Fry went to Lockheed and secretly co
-developed it. Hughes demanded performance specs
that everyone thought were impossible. He wanted
a plane that could outrun a Japanese zero fighter,
outclimb a bomber, and carry 40 passengers and
transcontinental luxury. Why all the secrecy?
He didn't want Pan Am or United to know what
he was building until it was too late for them
to catch up. They worked under code names. It
was a complete black project. And when they finally
unveiled it, well, there's a famous flight in
April 1944. This is during the war. The plane
is not for commercial use yet. Correct. Technically,
the first Connie's were designated C -69 and
went to the military. But Hughes wanted to show
off what his baby could do. He and Fry got in
the cockpit of a Constellation painted in full
TWA livery, and they flew it from Burbank, California
to Washington, D .C. And how fast did they do
it? Under seven hours. Six hours and 57 minutes,
to be precise. Seven hours. So it went from 36
to 13 to now under seven. We're getting close
to modern jet speeds here, and this is in a propeller
plane. It averaged about 330 miles per hour.
It shattered the existing transcontinental record.
But more importantly, it was a publicity stunt
that signaled TWA was no longer just hauling
mail. They were now the undisputed luxury leader.
The Constellation had these sleek lines, a triple
tail. It looked like a dolphin or a shark. It
was a sexy airplane. And that really sets the
stage for the next era. World War II ends, the
economy booms, and TWA enters its golden age.
This is the real madman era of flight. The late
1940s and the 1950s. This is when the airline
of the stars moniker really becomes true, not
just marketing. Tell me about the star of California
flight. That sounds like the perfect example.
It is. February 1946. TWA launches its commercial
constellation service, the inaugural flight from
Los Angeles to New York. The passenger manifest
reads like the credits of a blockbuster movie.
You add Cary Grant, Myrna Loy, Tyrone Power,
Edward G. Robinson, William Powell. Wow. Imagine
being on that flight. The cigarette smoke, the
clinking of martini glasses, the leg room. It
was an event, not just transportation. It absolutely
cemented the brand. If you were a movie star,
you flew TWA. If you were a business tycoon,
you flew TWA. And Hughes, now in full control,
pushed for international expansion aggressively.
He wanted to encircle the globe. They launched
service to Paris, Rome, Cairo, Tel Aviv, Bombay.
TWA became the way America traveled to the world.
But, and there's always a but with Howard Hughes.
All was not well in the boardroom. No. This is
where the eccentric part of the billionaire genius
becomes a massive liability. Hughes was chaotic.
He would disappear for weeks, sometimes months
at a time. He would meddle in the tiniest details
like the shape of the silverware or the fabric
on the seats while ignoring massive critical
financial decisions. And Jack Fry, who was trying
to run a functional airline, started clashing
with him constantly. So Fry wanted efficiency
and a plan. Hughes wanted perfection or control
or something else entirely. Fry was concerned
about the bottom line, about schedules, about
logistics. Hughes was concerned about, well,
about being Howard Hughes. In 1947, they had
a massive falling out. The airline was struggling
financially after the war. There were strikes,
operational issues. TWA stock had tanked from
a high of $71 down to just $9 a share. That is
a collapse. What caused such a dramatic drop?
A combination of post -war adjustment, a pilot
strike, and just the sheer chaos of Hughes' management
style. The airline was losing $20 million a year.
Hughes put more of his own money in to save it,
but he used that leverage to force Jackfy out
of the company he helped build. That feels like
a major, major turning point. It is a pivotal
moment. The source material calls it the end
of the airline run by flyers. Jack Fry was the
soul of the airline. He was the guy who flew
the planes, who understood the mechanics. When
he left, TWA stopped being an airline run by
pilots and started being an airline run by, well,
by an absentee billionaire and his accountants
from the tool company. And that change in management,
Hughes' complete control, led directly to the
biggest strategic stumble of all. The coming
of the jet age. We all know the jet age was coming.
The British had the de Havilland comet. Boeing
was secretly building the 707. Everyone in the
industry knew propellers were on their way out.
Speed was the new currency. The game was about
to change again. Everyone knew this except, apparently,
Howard Hughes' checkbook. He hesitated. He dithered.
Pan Am, their arch rival led by Juan Triped,
jumped in with both feet. They placed a huge
order for Boeing 707s and Douglas DC -8s. Pan
Am launched jet service in 1958 and completely
captured the market. Hughes just waited. Why
did he wait? Was he losing his touch? Was it
the money? It's complex. Part of it was his obsession
with the details. He kept trying to redesign
the jets on paper. He also had a preference for
the Convair 880, which was faster but smaller.
He was also becoming more reclusive, more paranoid.
He was trying to play the manufacturers off each
other, but all he did was lose time. By the time
he finally placed a massive order in 1956 for
33 jets, a mix of 707s and the 880s, it was late.
And it was incredibly expensive. How expensive
are we talking? The total order cost was $497
million. Half a billion dollars in 1956 money?
That's an astronomical sum. It was. And the Hughes
Tool Company didn't have that kind of cash on
hand. To fund the purchase, he had to go to a
consortium of Wall Street banks and insurance
companies. And the lenders had a condition, a
very big one. They said, we will lend you this
money, but you, Howard, have to step back. You
are too erratic. You are a risk we can't manage.
They put him in a timeout? They sidelined the
owner. Effectively. In the early 1960s, Hughes
was forced to put his TWA stock into a voting
trust, giving up control of the airline. He fought
it in court for years, but eventually lost and
sold his shares in 1966 for a massive profit.
But the damage was done. So the man who built
it into a global icon ultimately choked off its
future by waiting too long to modernize. Exactly.
It's the theme that haunts them. TWA had great
engineering, great pilots, an incredible brand.
But the financial management at the very top
was erratic and unreliable. And that pattern,
great product, shaky finance, haunts them for
the rest of their existence. So Hughes is out.
We enter the 1960s. The madman era continues.
The jets are finally flying. But now we have
a corporate guy in charge, a lawyer named Charles
Tillinghast Jr. Yes. And Tillinghast represents
the shift to the corporate conglomerate style
of the 60s. He wasn't an airline guy. He was
a lawyer and a businessman. He looked at the
airline industry and saw that it was brutally
cyclical. Boom and bust. When the economy is
good, people fly and you make money. When there's
a recession, the planes are empty and you lose
your shirt. So he wanted to hedge his bets, smooth
out the earnings. Precisely. He thought, let's
diversify. Let's create a holding company, Transworld
Corporation, and buy businesses in other industries.
And this is where the list of companies TWA bought
gets, well, it gets weird. It gets very weird.
I was reading the list in the source material,
and I had to double check I was looking at an
airline history. Right. So the holding company
bought Hilton International. Okay, that makes
sense. Hotels and airlines, there's a synergy
there. But then they bought Canteen Corporation,
a vending machine company, and then they bought...
Hardee's. Hardee's, the fast food burger place.
The burger place. And then the strangest of all,
they bought Century 21 Realty. So in theory,
you could fly TWA to a conference in Europe,
stay in a TWA -owned Hilton, get a snack from
a TWA vending machine, come home, buy a house
through TWA Century 21, and grab a burger to
celebrate at TWA's Hardee's. That was the corporate
dream of the 70s. It was all about smoothing
out those revenue streams. If the airline is
losing money, maybe the burgers are selling.
But what it also meant was that management focus
was diluted. They weren't just running an airline
anymore. They were running a sprawling, disconnected
conglomerate. But even with all this corporate
distraction, the airline brand was still innovating
on the customer face inside. I read they were
the first airline to introduce in -flight movies
all the way back in 1961. They were. And they
invested heavily in design and image. This brings
us to perhaps the most visible, beautiful legacy
of TWA that still exists today. The TWA Flight
Center at JFTA Airport in New York. Oh, the Aero
Surinam Terminal. It's iconic. It doesn't even
look like a building. Opened in 1962, it's that
swooping, concrete, bird -like structure. It
looked like the future had landed. It was pure
optimism in concrete form, designed to capture
the glamour and excitement of the jet age. I've
walked through it since it became the hotel.
There are almost no right angles. It feels organic
like a sculpture. Saarinen wanted to capture
the sensation of flight before you even got on
the plane. But, and here's the design tragedy
of TWA. While they were building architectural
masterpieces in New York, they were making a
massive, massive infrastructure mistake in the
Midwest. Let's talk about the Kansas City Hub.
This is a fascinating case study in a brilliant
design idea meeting a brutal new reality. TWA's
main base was in Kansas City for a long time.
They helped design the new Kansas City International
Airport, KCI. And the design philosophy was revolutionary.
Drive to the gate. What does that mean exactly?
The idea was ultimate convenience. You would
drive your car, park right outside your gate,
walk maybe 100 feet, and you were on the jet
bridge. No long terminals, no trams, no miles
of walking, just curb to plane. That actually
sounds amazing. Why don't we have that everywhere?
It sounds amazing for 1965 when it was designed,
but the airport didn't open until 1972. And what
happened in the late 60s and early 70s? Hijackings.
Hijackings. The hijacking epidemic, mostly to
Cuba, changed everything in aviation. Suddenly,
you needed centralized security checkpoints,
metal detectors, X -ray machines for bags. You
can't put a full TSA style security checkpoint
at every single gate door along a horseshoe shaped
terminal. Exactly. The drive to the gate design
made centralized security physically impossible.
They had to retrofit these awkward, ugly glass
walls and tiny checkpoints into the skinny terminal
corridors. It was an operational disaster. The
terminals were too narrow for the crowds. Connecting
flights were a nightmare. The design was obsolete.
the day it opened. So TWA has this brand new
hub that is fundamentally broken. Correct. And
because of that massive inefficiency, they were
eventually forced to move their main domestic
hub to St. Louis in the early 80s. They abandoned
their dream in Kansas City because the world
had changed around their design. So we move into
the 1970s, and the 70s were tough for everyone
in America, but especially for the legacy airlines.
It was the perfect storm. First, you had the
introduction of the Boeing 747 jumbo jet. TWA
bought a lot of them because Pan Am did. They
didn't want to be left behind again. But the
747 is a huge, huge plane to fill. Nearly 400
seats. Then the 1973 oil embargo hits. Fuel prices
skyrocket. So now you have these massive planes
that guzzle fuel flying half empty because the
economy is in a recession. It was a recipe for
losing money. And then the knockout punch. 1978.
The Airline Deregulation Act. The game changer.
We have to explain this briefly because it's
so important. Before 1978, the government, an
agency called the Civil Aeronautics Board, or
CAB, set the routes and the prices. Airlines
competed on service. The quality of the steak,
the freeness of the champagne, the legroom. It
was a protected, regulated utility. It was cozy
for the big players. Very cozy. After 1978, the
gloves came off. Anyone could start an airline,
fly anywhere they wanted, and charge whatever
the market would bear. New low -cost carriers
like People Express and Southwest popped up.
Vicious price wars began. And TWA. With its high
cost, its powerful unions, and its older gas
-guzzling fleet, they were incredibly vulnerable.
Extremely vulnerable. They had a high -cost structure
from the regulated era. They couldn't compete
on price with the new non -union startups. The
source material mentions a really telling detail
about their desperation in the mid-'70s, even
before deregulation. In 1975, they were so poor,
so desperate for cash, they sold six of their
prized 747s to the Imperial Iranian Air Force.
Air Force. Yes. This was pre -revolution Iran
under the Shah. They sold them for a fraction
of their value. It was a fire sale. They were
selling the crown jewels just to make payroll
that month. It was a sign of deep, deep trouble.
That brings us to the 1980s. And this is where
the story shifts completely from engineering
and glamour to pure Wall Street bloodsport. The
corporate raider era. In 1983, the holding company,
the one that owned Hardee's and Hilton, decides
the airline is a drag on its profits. So they
spin it off. They basically say to the airline,
you're on your own. Good luck. TWA was now an
independent company again for the first time
since Hughes bought it. But it was starved for
capital, loaded with debt and flying an aging
fleet. And in the shark tank of the 1980s, a
weak company is blood in the water. And two of
the biggest sharks in the water start circling.
Frank Lorenzo and Carl Eichen. And this is a
fascinating and ultimately tragic bit of labor
history. It really is. First, you have Frank
Lorenzo. He was the head of Texas Air and Continental,
and he was known as a fierce, ruthless cost cutter.
The unions absolutely despised him. They called
him the ultimate union buster. He had a history
of using bankruptcy laws specifically to avoid
union contracts and slash wages and benefits.
So the TWA employees see Lorenzo making a bid
for the company and they panic. Complete panic.
And then. The other bidder emerges, Carl Icahn.
Carl Icahn was a different kind of animal. He
was a financier, a corporate raider. He didn't
know how to run an airline, but he knew how to
buy undervalued stock and extract value. So the
TWA unions, particularly the Pilots Union, ALPA,
and the Machinists Union, IAM, were faced with
an impossible choice. Lorenzo or Icahn? A choice
between the executioner you know and the complete
unknown. It was a true Sophie's choice. They
looked at Lorenzo and saw a certain doom for
their contracts and their careers. They looked
at Econ and thought, maybe we can work with him.
He's just a finance guy. He wants to make money.
He doesn't have this personal vendetta against
unions like Lorenzo does. So in an incredible
move, the unions actually supported Econ's takeover.
They went to him and offered massive concessions,
deep pay cuts to help him finance his bid to
buy the airline and fend off Lorenzo. They invited
the vampire into the house because they were
afraid of the wolf at the door. That is a very,
very apt analogy. Atkin takes control in 1985.
And for a brief moment, there was hope. But then
in 1988, he makes his move. He takes the company
private. Let's unpack taking it private. What
did that actually mean for TWA's bank account?
Because this is the moment. This is the critical
moment. This is where the airline is financially
murdered. even if the body keeps flying for another
12 years. When Eichen took TWA private, it was
through a leveraged buyout, an LBO. Essentially,
he used the airline's own credit and assets as
collateral to borrow the money to buy the airline
from the public shareholders. So the airline
itself pays for its own purchase. Correct. TWA,
the company, took on all the debt. According
to the source, the deal was structured so that
Aiken personally made $469 million in cash profit
from the transaction. Almost half a billion dollars
in profit for him personally. And TWA, the airline.
TWA was saddled with $540 million in new, crippling
debt. So he walks away with the cash and the
airline is left holding a massive mortgage it
can't possibly afford. A mortgage with enormous
interest payments. The airline was now drowning
in debt service. To raise cash to pay that debt,
Icahn started doing what raiders do. He started
selling assets. Asset stripping. And in 1990,
he sold the single most valuable thing TWA owned,
the routes to London Heathrow. To American Airlines.
To American Airlines. Selling the Heathrow routes
was like a Michelin -starred restaurant selling
its kitchen. Those were the profitable, prestigious,
high -yield routes. Those were the business travelers.
TWA has been 40 years building that market dominance.
Once those were gone, TWA was effectively a domestic
airline with a few flights to other European
cities. The trans -world part of the name started
to mean less and less. It's just heartbreaking.
They are selling the family furniture just to
pay the interest on the rent. And it gets worse.
After he's loaded the company with debt and sold
its best assets, he puts it into bankruptcy.
But he's not done. We have to talk about the
Caribou deal. This sounded like a confusing legal
mess in the notes, but when you look at the numbers,
it's just shocking. Break it down for us. So
TWA goes bankrupt in 1992. It's the inevitable
result of that massive debt load. Econ is eventually
ousted in 1993. The employees and creditors take
over. But as he's leaving, Econ negotiates a
parting gift for himself, a poison pill. He's
leaving, but he's not done taking from the company.
Not even close. See, he had loaned TWA about
$190 million during the bankruptcy to keep it
afloat. TWA couldn't pay him back in cash. So
they agreed to a deal with a new travel company
ICON set up called Caraboo. What were the terms
of this deal? The deal gave Caraboo the right
to buy any TWA ticket on any TWA flight, except
for code shares at a 45 % discount from the published
fare. 45 % off anything? Yes, for 10 years. But
here is the real kicker. Caribou could buy an
unlimited number of these tickets and then resell
them to the public. They set up a website, LoisFair
.com, to do exactly that. So wait, Icon's company
could buy a ticket from TWA for $55, turn around
and sell it to me for $80, keep the $25 profit
while undercutting TWA's own price of $100. Worse
than that, it meant TWA lost control of its own
inventory and its own pricing. This is crucial
in airline economics. Airlines make their money
on something called yield management. They sell
cheap. Keep seats early to fill the plane. Then
they make their profit by raising the price for
the last minute business traveler who has to
fly. Right. The guy flying tomorrow for a meeting
pays top dollar. But with the caribou deal, if
TWA tried to raise the price on a popular route,
say St. Louis to New York caribou, would just
buy up all the seats at the 45 percent discount
and sell them keeper. TWA couldn't raise prices.
They couldn't make money on the busiest flights
because Carl Eichelon was essentially skimming
all the high yield revenue off the top. The source
material says this cost them how much a year?
The estimates are around $150 million in lost
revenue per year. That is a bleeding wound you
cannot possibly stitch up. It was a ticking time
bomb that Eichen left in the fuselage. The airline
was trying to recover, trying to modernize, but
they had this anchor dragging them straight to
the bottom. They were essentially subsidizing
their former owner's new competing business.
And speaking of tragedy, we are in the mid -90s
now. The airline is financially crippled. Morale
is at rock bottom. And then comes July 17, 1996.
Flight 800. A dark, dark day in aviation. TWA
Flight 800, a Boeing 747, takes off from JFK,
bound for Paris on a warm summer evening. Minutes
after takeoff, it explodes over the Atlantic
off the coast of Long Island. All 230 people
on board were killed. I remember the news coverage
of this vividly. It was on 2047. There were so
many theories. A missile, a bomb, a terrorist
attack. The investigation took years. The FBI
was involved. The CIA was involved. It was one
of the most complex in history. But the NTSB
eventually concluded it was a mechanical failure.
A center wing fuel tank exploded, most likely
caused by a spark from faulty wiring. But while
the investigation was happening, the narrative
that formed in the media was absolutely devastating
for TWA's reputation. It was because even before
they knew the cause, the media focused heavily
on one fact. This specific 747 was 25 years old.
It reinforced the public perception that TWA
was a broke airline flying old, unsafe, clapped
out equipment. The airline that can't afford
new planes. Exactly. Even though the age of the
plane wasn't the direct cause, maintenance and
design protocols were changed for the entire
global 747 fleet after that regarding fuel tank
and earning the brand damage was done. It was
seen as the old airline, the unsafe airline.
He tried to fight back, though, didn't they?
I read in the late 90s they made one last big
push. They ordered a bunch of new planes. They
did. In 1998, under new management, they placed
a massive order for 125 new aircraft. Boeing
757s, 767s, MD -80s. They were trying to refresh
the fleet and the image. They even bought the
naming rights to the football stadium in St.
Louis. It became the Transworld Dome. The home
of the greatest show on turf, the St. Louis Rams.
I remember that. They were trying to look like
a winner again. They were trying to project vitality.
We are back. We are new. They had a clever promotion.
Pay in coach, fly in first. for flights to the
St. Louis hub to try and fill up those premium
seats. They were scrambling, trying everything
to win back customers. But with the Caribou deal
still draining cash every single day and the
mountain of debt from the Eichen years. It was
too little, too late. The math just didn't work.
You cannot outrun that kind of fundamental financial
handicap. So we arrive at the end. The 2000s.
January 2001. The third bankruptcy. Third time
is not the charm. No. This time, it was the end
of the line. American Airlines swoops in. They
agree to acquire TWA's assets. They didn't really
merge in the traditional sense, did they? It
was an acquisition of the parts, not the whole
company. Correct. A new entity called TWA Airlines
LLC was formed just to facilitate the transfer
of assets. The deal included a $745 million payment,
but mostly it was about American taking the planes,
the airport gates, and the routes. They didn't
want the company. They wanted the stuff. December
1st, 2001. The last day. The last day. Flight
220 from Kansas City to St. Louis. It was a ceremonial
final flight. The CEO at the time, Captain William
Compton, was at the controls. It was a very emotional
flight for the employees and everyone on board.
There is a detail in the source material about
that night that really sticks with me. It's so
final. The sign removal. Yeah. At 10 .00 p .m.
Central Time, employees at airports across the
country started taking down the TWA signs, the
red and white logos. By midnight, everything
on the departure boards, all the gate signs,
were changed to American Airlines. It's a ghost
town effect. One minute and 71 -year -old American
icon exists. The next minute, it's just paint
and plastic being thrown in a dumpster. It happened
officially overnight. And for the thousands of
employees. It was brutal. American Airlines absorbed
the airline, but then 9 -11 happened just a few
months later. The entire industry contracted
violently. American laid off thousands of employees.
And the former TWA employees, having the least
seniority at the newly combined company, were
often the first to go. The St. Louis hub, which
was supposed to be a key asset in the deal, American
eventually downsized it and closed it as a main
hub in 2009. The massive Kansas City maintenance
space closed in 2010. So not only did the brand
die, but the infrastructure and the jobs it supported
were largely dismantled over the next decade.
It was a total erasure. If you go to St. Louis
Lambert Airport today, you can still feel the
phantom limb of TWA, but the massive operation
that was once there is gone. Right. It's not
completely gone. And this brings us to the outro.
The legacy. You can't kill a brand that strong
completely. It lives on in memory and nostalgia.
And in architecture. In a really beautiful way.
The TWA Hotel. Yes. The Aero Serena Terminal
at JFK, which sat empty and crumbling for nearly
two decades, was meticulously restored. It reopened
in 2019 as the TWA Hotel. Have you seen photos
of it? It's incredible. They have the old split
flap departure boards that go clack, clack, clack.
They have the sunken lounge with the chili pepper
red carpet. They even took an old Lockheed Constellation,
one of the original Connie's, and turned it into
a cocktail bar on the tarmac. It's pure distilled
nostalgia. It celebrates the golden age we talked
about in part two. It freezes TWA in time, back
when it was glamorous and exciting, before the
corporate raiders and the bankruptcies. It's
TWA as we all want to remember it. Not as it
actually ended. And American Airlines, to their
credit, has painted a few of their modern jets
in the TWA heritage livery over the years. A
nod to the history. It's nice to see the Twin
Globes logo on a fuselage again, even if it's
just a coat of paint. So as we wrap this up,
what does this all mean? We started by asking
how the airline of the stars ends up being sold
for parts. What's the final takeaway? I think
the answer is that TWA was an airline defined
by romance and engineering. It was built by pilots
like Lindbergh and Fry and eccentric visionaries
like Hughes. They cared about speed, altitude
and style. They pushed the envelope of what was
physically possible with an airplane. But they
lost the war on finance. They were ultimately
dismantled by financial engineering. Hughes's
critical delay on jets cost them their market
lead. The 70s diversification distracted them.
And then the leveraged buyout in the 80s hollowed
the company. out from the inside. The caribou
deal was just the final parasite that drained
the last drop of blood. It was a death by a thousand
financial cuts. It really raises a big question
about these legacy businesses. Can you survive
just on a great name and a great history? No,
not in an industry this brutal. The airline industry
is unforgiving. It operates on razor -thin margins.
If you don't constantly reinvent your business
model, not just your planes, but your balance
sheet, your cost structure, you die. TWA stopped
reinventing the business and started just trying
to survive the debt. Here's a provocative thought
to leave you with. What would the airline industry
look like today if Howard Hughes had bought those
jets five years earlier? Or what if the employees
in 1985 hadn't picked Daikon? If they had accepted
their fate with Lorenzo. Yeah. It would have
been brutal, but would TWA in some form still
be flying today? Or was it just destined to become
a beautiful relic of a more glamorous bygone
time? That is the billion dollar what if. Maybe
there just isn't room for that kind of glamour
anymore in a world of budget carriers and basic
economy. Next time you're at an aviation museum
or maybe just walking through JFK on your way
to that bus station in the sky, look for the
Twin Globes logo. It really stands for a time
when flying was something special. Thanks for
listening to this deep dive. Safe travels.