Trans World Airlines is cutting jobs, has a fresh look and is introducing new frequent flyer incentives in a bid to attract high-yielding business traffic, but Wall Street analysts question if the returns will come quick enough.
'There is a mad dash going on to improve the product and the image before time runs out,' says New York-based PaineWebber's Samuel Buttrick. 'But time is not on TWA's side.'
The St Louis-based airline has a busy time ahead of it. Management is looking to cut staff numbers by 1,000 to 23,500 by December. More than $2 billion worth of new or near-new aircraft are being delivered this year and next in an effort to trim maintenance costs and reduce aircraft types from 15 to nine.
TWA also has a new livery and a marketing campaign focused on the high-yield business passenger. In a big gamble, the carrier is expanding its premium class by offering 60 per cent more business-class seats, and from mid-August started offering purchasers of unrestricted tickets an extra mile for each dollar spent on top of any other frequent flier awards. 'We are going to give the full-fare traveller more,' says the carrier.
TWA's second quarter performance was a mixed bag. The airline beat all other US majors in ontime performance - last year it held the worst record. But it still suffered a net loss of $18.3 million when most majors were posting record profits. 'It's very difficult to argue with any of the steps that management has taken, but as an investor one has to be frustrated at how long it takes for these product improvements to translate into unit revenue improvements,' says Buttrick.
Karen Walker
Source: Airline Business
