[edit] 1992 bankruptcy
Although Tillinghast continued a golden era for TWA, he ignored the trans-Pacific market and the dedicated air cargo market. He was accused of saying, "There's no money in the Pacific and there's no money in cargo. We're gonna' shrink this airline 'til it's profitable." These two oversights are said to be the undoing of TWA.
Airline deregulation hit TWA hard in the 1980s. TWA had badly neglected domestic U.S. expansion at a time when the newly deregulated domestic market was growing at an exponential rate. TWA's holding company, Trans World Corporation, spun off the airline. But the airline became starved for capital after having been spun off. The airline briefly considered selling itself to corporate raider Frank Lorenzo in the 1980s, but ended up selling to corporate raider Carl Icahn in 1985. Under Icahn's direction, many of its most profitable assets were sold to competitors, much to the detriment of TWA. Icahn also moved the company's headquarters from New York City to his hometown Mt. Kisco, New York. Icahn was eventually ousted in 1993, though not before the airline was forced to file for bankruptcy in 1992. Icahn emerged unscathed. TWA moved its headquarters from Mt. Kisco to the former headquarters building of McDonnell Douglas in St. Louis soon after Icahn left.
[edit] 1995 bankruptcy
When Carl Icahn left in 1993, he arranged to have TWA give Karabu Corp., an entity he controlled, the rights to buy TWA tickets at 45 percent off published fares through September 2003. This was named "The Karabu deal" [3]. The ticket program agreement, which began on June 14, 1995, excluded tickets for travel which originated or terminated in St. Louis, Missouri. Tickets were subject to TWA's normal seat assignment and boarding pass rules and regulations, were non-assignable to any other carrier and were non-endorsable. No commissions were paid to Karabu by TWA for tickets sold under the ticket program agreement.
By agreement dated August 14, 1995, Lowestfare.com LLC, a Karabu wholly owned operating subsidiary, was joined as a party to the ticket program agreement. Pursuant to the ticket program agreement, Lowestfare.com LLC could purchase an unlimited number of system tickets. System tickets are tickets for all applicable classes of service which were purchased by Karabu from TWA at a 45 percent discount from TWA's published fare. In addition to system tickets, Lowestfare.com LLC could also purchase domestic consolidator tickets, which are tickets issued at bulk fare rates and were limited to specified origin/destination city markets and did not permit the holder to modify or refund a purchased ticket. Karabu's purchase of domestic consolidator tickets was subject to a cap of $70 million per year based on the full retail price of the tickets.
Hence, on most TWA flights, Karabu could buy and then sell a sizable portion of the available seats, leaving TWA to pay for its operating cost with the revenue accrued through the sale of any remaining ticket sales. In other words, TWA was flying passengers who were not paying them, but someone else. This deal left the company powerless. If TWA wanted to increase revenue on busy routes by putting a large plane into service, Karabu could only claim more seats. It is estimated TWA was losing around $150 million a year in revenue with this deal.
In trying to ameliorate the Karabu deal, TWA went in and out of bankruptcy in 1995.
[edit] TWA Flight 800
Main article: TWA Flight 800
On July 17, 1996, TWA Flight 800 exploded over the Atlantic near Long Island, killing all aboard. The National Transportation Safety Board concluded that the most likely cause of the disaster was a center fuel tank explosion sparked by exposed wiring. The cause is debated but the media focused heavily on the fact that TWA's airline fleet was among the oldest in service.
[edit] Short turn around
By 1998, TWA had reorganized as a primarily domestic carrier, with routes centered around hubs at St. Louis and New York. Partly in response to TWA Flight 800 and the age of its fleet, TWA announced a major fleet renewal, ordering 125 new aircraft. TWA paid for naming rights for the new Trans World Dome, home of the St. Louis Rams in its corporate hometown.
TWA's fleet renewal program included adding newer and smaller, more fuel efficient longer-range aircraft such as the Boeing 757 and 767 and short-range aircraft such as the McDonnell Douglas MD-80 and Boeing 717. Aircraft such as the Boeing 727 and 747, along with the Lockhead L-1011 and older DC-9s, some from Ozark and the 1960s, were retired. TWA also became one of the early customers for the small Airbus A318 through the ILFC. TWA, had it continued operating through 2003, would have been the first U.S. carrier to fly the type.
The routes that TWA flew were also changed. Several international destinations were dropped or changed, and the focus of the airline became domestic routes through its St. Louis hub and smaller New York (JFK) and San Juan hubs. Domestically, the carrier improved services with redesigned aircraft and new services, including "Pay in Coach, Fly in First", where passengers could be upgraded to first class from coach when flying through St. Louis. Internationally, services were cut. European destinations eventually were limited to London, Paris, Lisbon, and Milan, and in the Middle East, to Cairo, Riyadh, and Tel Aviv.
[edit] 2001 bankruptcy and acquisition by American Airlines
Financial problems began to resurface shortly afterward, and TWA's airline assets were acquired by American Airlines in April of 2001. As part of the deal, TWA declared Chapter 11 bankruptcy (for the third time) the day after it agreed to the purchase. The terms of the deal was a $500 million payment however since American assumed TWA's liabilities the deal was estimated to have cost American $2 billion.[4] American did not claim the naming rights for the Rams home, which eventually became the Edward Jones Dome, named after the financial services company with the same name.
Trans World Airlines flew its last flight on December 1, 2001. The ceremonial last flight was Flight 220 from Kansas City, Missouri, to St. Louis, with CEO Captain William Compton at the controls. However, the final flight before TWA officially became part of American Airlines was completed between St. Louis and Las Vegas, Nevada, also on December 1, 2001. At 10:00 p.m. CST on that date, employees began removing all TWA signs and placards from airports around the country, replacing them with American Airlines signs. At midnight, all TWA flights officially became listed as American Airlines flights. Some aircraft carried hybrid American/TWA livery during the transition, with American's tricolor stripe on the fuselage and TWA's name on the tail. Signage still bears the TWA logo in portions of Concourse D at Lambert St. Louis International Airport. One lighted TWA sign still exists (as of 2006) on the runway side of Saarinen's New York JFK terminal. According to Dave Barger, COO of JetBlue Airways, JetBlue intends to retain the lit TWA sign on the Saarinen terminal after the renovation of Terminal 5.
TWA's St. Louis hub suffered after the merger due to its proximity to American's much larger hub at Chicago's O'Hare International Airport. As a result, American replaced TWA's St. Louis mainline hub with regional jet service (going from over 800 operations a day to fewer than 300) and downsized TWA's maintenance base in Kansas City. Furloughs and layoffs have left less than 1,500 of 24,000 TWA employees with American Airlines jobs. Although American Airlines acquired over 200 aircraft from TWA (MD80s, 717s, 757s, and 767s), many analysts believe the TWA assets were not worth the additional debt inherited from TWA — however American did eliminate one of its prime competitors.
Terrorist target
From 1969 to 1986 five TWA airliners were terrorist targets.
- In 1969 TWA Flight 840 from Rome to Athens was hijacked to Damascus. Nobody was injured and its nose was blown up (although replaced and the plane returned to service).
- In 1970 TWA Flight 741 was hijacked after taking off from Frankfurt am Main, Germany, to New York. It was taken to Dawson's Field in Jordan with two other hijacked aircraft. All three aircraft were empty of passengers and crew before being destroyed. A fourth aircraft that landed in Cairo, Egypt suffered a similar fate.
- In 1974 TWA Flight 841 from Tel Aviv to New York crashed shortly after takeoff from Athens after a bomb believed to have been in the cargo hold exploded, killing all 88 onboard.
- In 1985 TWA Flight 847 from Athens to Rome was hijacked first to Beirut, then to Algiers, back to Beirut, back to Algiers, and finally back to Beirut—with some of its fuel being paid for by the Shell credit card of flight attendant Uli Derickson.
- In 1986 TWA Flight 840 was again attacked with an onboard bomb, ejecting four Americans to their deaths.