Sold to the Operators

Twelve years ago burly Pilot Jack Frye and chunky Pilot Paul Richter started an airline between Los Angeles and Tucson. Today Frye is president, Richter vice president of Transcontinental & Western Air, Inc., one of the nation's big four domestic airlines. As pilot of this big business, 35-year-old Jack Frye no longer has time to try for the transcontinental record he once held, but he still spends many an hour in the cockpit. Says he: "It's the best way I know of to clear the cobwebs from the brain."

In 1935 when the airline business suddenly looked good, Partner John D. Hertz (Yellow Cab Co.) of Lehman Bros, joined with Floyd Odium's Atlas Corp. to purchase 81,204 shares of T. W. A. from General Motors at some $14.50 a share. This 13% interest gave them operating control. Next year T. W. A. made $205,000 and its stockclimbed to $27.50. But in 1937 T.W.A. lost $959,000, in 1938 $773,000. Its stock dropped to $4, was last week at $8 when Lehman Bros, announced with an audible sigh of relief that it had sold out to Jack Frye and Paul Richter.

T. W. A.'s chief operating handicaps have been its poor airmail contract and the lack of feeders for its slim cross-country line. The new Civil Aeronautics Authority has partly remedied the first by awarding T. W. A. $400,000 extra mail compensation two months ago and increased further compensation. John Hertz tried to remedy the second last year by unsuccessfully bidding for Eastern Air Lines (TIME, March 14, 1938).

Last week Jack Frye and Paul Richter said they had big plans for expansion. But Wall Street and the world of aviation was more interested in how two up-from-the-ranks pilots financed the purchase of the 70,000 shares Lehman Bros, sold them. Jack Frye refused to tell. Rumors dwelt on Millionaire Howard Hughes and Cinema Agent Leland Hayward, who last month became a T. W. A. director.

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