Rough Air

T.W.A. had stretched its resources thin expanding into the glamorous field of overseas air transportation. But it would have skinned by without much trouble if the 25-day pilots' strike had not knocked it flat. By last week, T.W.A.'s financial position was worrisome enough to fill the air with more rumors than Constellations.

There was no truth, said both sides, to gossip that T.W.A. was going to sell out to Pan American Airways. But it was true that T.W.A. was sounding out the RFC and private banks for a whopping loan.

The reasons why T.W.A. needed the cash were dismally plain. In the third quarter, T.W.A. reported last week, it had lost $3,235,491, bringing the net loss for the first nine months to $4,846,450. The third quarter losses, said President Jack Frye, were caused by CAA's grounding of Constellations. And the pilots' strike was likely to make the fourth quarter the worst of the year.

Disappearing Dreams. Outsiders thought that some of T.W.A.'s troubles were also due to T.W.A.'s overambitious expansion plans. T.W.A. had increased its payroll to service many foreign routes before T.W.A. had the planes to fly them. Now, the strike had caused the line to cancel orders for 25 new planes and it was shrinking its payrolls even faster than it had expanded; it planned to lay off 3,400 of its 16,000 employes by year's end. Like other transatlantic lines, it was also flying half-empty planes from the U.S. to Europe. Reason: travelers were being scared out of going for fear they could not get back on the overcrowded return runs.

By March, T.W.A. hopes that the backlog of returning travelers will be gone, that balanced travel will put their Atlantic operations into the black. Meanwhile T.W.A. still plans to follow out its globe-girdling plans, hopes to start flying to Bombay in a month, to Ceylon, Calcutta and Shanghai shortly after.

Grey Dawn. To do this, optimistic Jack Frye knew that T.W.A. needed more money--and plenty of it. T.W.A. might get a loan from RFC or private banks although it already owes the Equitable Life Assurance Society $40 million. Jack Frye also plans to ask his stockholders to authorize issuance of another 2,000,000 shares of stock (985,929 shares now outstanding).

If he sold them all at the present price of T.W.A. stock, an unlikely prospect, he could raise around $40,000,000. One T.W.A. stockholder estimated T.W.A. would need as much as $100,000,000. And with T.W.A. stock down to $21 a share from its high of $71 in January, the market for new issues looked none too good.

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