A move by Trans World Airlines to raise $26 million in cash from pre-purchase tickets is further evidence of the airline's growing financial woes.
TWA struck an advance purchase deal with 20 leading businesses in its home town of St Louis for discounted tickets. It is the second time in two years that this type of arrangement has been forged.
The deal has fuelled rumours that the airline continues to struggle to find its financial feet despite the restructuring of its New York/John F Kennedy operation. 'Dire straits is what I keep hearing,' says one analyst. 'I think they are struggling to find a new cause for themselves. Anytime you have a majority of the board members who are creditors, then the philosophy changes to one of conflict with Wall Street and the media.' Another analyst says there is 'no question' that the $26 million helped to fund the payroll.
TWA has yet to publish its 1996 fourth quarter results and refuses to say when it will do so. Nor is the carrier disclosing its current cash position. But in a Securities and Exchange Commission filing at the end of 1996, the company did say it expected cash reserves to be 'significantly lower' than a year earlier.
TWA has also been experiencing labour problems. Shortly before he was confirmed as chief executive, Gerald Gitner received a vote of no confidence from the members of the International Association of Machinists. The union has threatened court action if the airline continues its downsizing. In February, TWA put a hiring freeze into effect for 'non front-line' employees and some flight attendants have been furloughed as part of the restructuring. The airline continues to hire pilots, however.
Source: Airline Business
