After years of proving detractors wrong and just as the carrier was showing signs of recovery, TWA is once again fighting to prove that it can survive, following the crash of Flight 800 off New York's Long Island on 17 July.
In the three weeks that followed the crash of the B747, with the cause still unknown, industry experts were prepared to give TWA the benefit of the doubt over its chances for survival. Nonetheless, the comparisons to the 1989 downing of Pan Am Flight 137 over Lockerbie, Scotland, which helped seal the fate of that carrier, keep surfacing.
TWA officials understandably bristle at the comparison. 'If you are knowledgeable about the industry, you know that after the immediate dimensions of the tragedy there are very few similarities,' counters TWA. 'Pan Am was predominantly an international carrier, while TWA is primarily domestic. The Pan Am incident occurred as the industry was [on the verge of] dropping into the worst depression in commercial aviation. Now the entire economic picture is strong.'
Or seemingly strong. Though TWA figures show that traffic in July dropped negligibly for its system, 75 per cent of which serves the domestic US market, analysts are uncertain about forward bookings for the entire industry, not just TWA. The carrier has been able to cut interest payments and increase revenues, but it has also benefited from an across-the-board upturn in profits, boosted in part by the absence of the 10 per cent federal ticket tax. The tax, which Washington failed to renew at the start of this year as part of wider budget battles, will be reactivated making Wall Street and US carriers rethink rosy profit predictions for the coming quarters.
The immediate impact of the disaster on TWA's finances was quick to surface. Buoyed by six quarters of improved performance since surviving a second bankruptcy filing, and with second quarter net results of $25 million - up $20 million on the same period in 1995 - the airline was preparing to go to market with an 8 million share public offering (plus an over-allotment for an expected large pool of subscribers). Plans for that were immediately dropped. Though the offering was still in registration in early August, observers believe that the airline may have to wait at least until the fourth quarter to put it in play.
TWA has continued to operate its international services, though the loss of the B747-100 has placed additional stress on a system which was already short of capacity during the peak travel season. In May the carrier had taken steps to rectify this shortage by swapping the L.1011s flying international routes with the B747s that were operating on domestic sectors.
TWA had also hoped to rectify this capacity shortfall further in June with the leasing in of four B747-200s, but delivery delays meant that the aircraft did not start entering service until July. The replacement of the lost B747-100 with an L.1011 internationally will add up in capacity terms over the peak season. 'When you give up 140 seats across the Atlantic, you give up a significant number of available seat miles,' the carrier says.
Mead Jennings
Source: Airline Business
