St. Louis Takes a Flier On TWA
ST. LOUIS — ST. LOUIS corporations are throwing a lifeline to financially troubled Trans World Airlines, which has its main hub at Lambert International Airport here.
Last week, 23 local companies -- including McDonnell Douglas Corporation, Monsanto Company, and Ralston Purina Company -- announced a plan to prepurchase 110,000 tickets from the airline.
''It is very important to St. Louis that we maintain hub airline service here,'' says Al Kerth, spokesman for Civic Progress, the business group spearheading the prepurchase plan. Headquartered here, TWA employs more than 7,000 local residents and its demise would mean many fewer nonstop flights for St. Louis travelers.
To avoid filing bankruptcy for the second time in three years, the airline is negotiating with creditors to reduce its current debt of nearly $2 billion by about $500 million.
The last bankruptcy gave creditors 55 percent of the company stock. That stake could now rise to as much as 70 percent. Airline employees would hold the rest of the company's shares. TWA is not disclosing the value of the prepurchase agreement. But the ticket sales are enough to fill 1,222 DC-9 planes, says spokesman John McDonald. Airline analysts estimate the deal will provide from $22 million to $66 million in cash.
Wall Street probably won't be impressed, says Michael Boyd, president of Aviation Systems Research, a consulting firm in Golden, Colo. ''Preselling tickets is simply borrowing from the future to make today's payments.'' These kind of ''desperation'' tactics have been tried by other airlines in the past and have not worked very well, Mr. Boyd says.
''But this is probably a first for a community to get together on such a large scale,'' Boyd says. ''It says a whole lot about St. Louis. Losing TWA would be for St. Louis like Ford Motor Company leaving Detroit.''