What Happened to TWA? How Trans World Airlines Went From Hughes to Bankrupt

TWA no longer exists. Trans World Airlines filed for its third bankruptcy in January 2001, American Airlines bought substantially all of its assets that April, and the last flight under the TWA name landed on December 1, 2001.

The bankruptcy was only the last step. TWA spent 40 years losing ground: Howard Hughes lost control over a jet order he could not finance, the 1970s brought an oil shock and half-empty jumbo jets, deregulation arrived in 1978, and Carl Icahn’s buyout left the airline with $540 million of debt and fewer of its best routes.

Here is the whole story, from the 1930 airmail merger to the hotel that now stands in TWA’s old terminal at JFK.

Is TWA still in business?

No. TWA has not flown since December 1, 2001. American Airlines ran the airline as a subsidiary, TWA Airlines LLC, from April 2001 and folded its flights into American’s schedule at midnight that night.

The legal shell lasted a little longer. TWA Airlines LLC existed under American until July 1, 2003, and the last former TWA McDonnell Douglas MD-83 left American’s fleet in September 2019.

So who owns TWA now? American Airlines owns what was left of it. The TWA name you can still book is a hotel, not an airline: the TWA Hotel at JFK.

1930s: an airmail merger, not a Howard Hughes startup

TWA began on October 1, 1930, as Transcontinental & Western Air. Postmaster General Walter Folger Brown pushed Transcontinental Air Transport, Western Air Express and several smaller carriers together because he wanted bigger airlines to hand airmail contracts to.

The new airline flew New York to Los Angeles via St. Louis and Kansas City with Ford Trimotors, and Charles Lindbergh’s role at Transcontinental earned it the nickname “The Lindbergh Line.” On October 25, 1930, it offered one of the first all-plane coast-to-coast schedules, a 36-hour trip with an overnight stop in Kansas City.

The 1931 crash of a TWA Fokker F-10, which killed Notre Dame football coach Knute Rockne, grounded the airline’s wooden-winged Fokkers. Boeing’s new 247 was reserved for its sister airline United, so TWA paid Douglas to design a replacement: the DC-1, which led to the DC-2 and the Douglas DC-3.

The 1934 Air Mail scandal dissolved the forced merger. Transcontinental kept the T&WA name, and Lehman Brothers and John Hertz took over a struggling company.

1939 to 1960: the Howard Hughes years

Hughes turned TWA into a second American flag carrier alongside its great rival Pan Am. He and Lockheed developed the Constellation in secret, and TWA opened its New York to Paris route with one on February 5, 1946.

Hollywood stars on those early flights gave TWA its “airline of the stars” image. On May 17, 1950, Transcontinental & Western Air officially became Trans World Airlines, and routes soon reached Europe, the Middle East and Asia.

Hughes was also the airline’s first big problem. He bought aircraft through his own Hughes Tool Co., meddled in management, and drove out executives, including a president who lasted less than a year.

His undoing was the jet age. In 1956 Hughes Tool ordered 33 Boeing 707s and 30 Convair 880s, an order that cost $497 million, and TWA came late to jets while the money was found.

The lenders’ price was control. In December 1960 Hughes’s shares went into a three-person voting trust, two of whose members represented the lenders, Charles Tillinghast Jr. took over as president, and after years in court Hughes sold his stake in 1966 for $546.5 million.

1960s: TWA’s best decade

Free of Hughes, TWA thrived. On July 19, 1961, it showed “By Love Possessed” on a transcontinental Boeing 707, the start of regular in-flight movies.

In 1962 it opened Eero Saarinen’s TWA Flight Center at JFK, the swooping terminal that is still standing. On April 7, 1967, it retired its last piston airliners and became one of the first all-jet airlines in the United States.

The holding company, Trans World Corp., also bought businesses that had nothing to do with flying: Hilton International in 1967, then Canteen Corp., Hardee’s restaurant franchises and Century 21 real estate.

1970s: jumbo jets, oil and deregulation

TWA put the Boeing 747 into service in 1970 and later added the Lockheed L-1011. It ordered them largely because Pan Am had, and in the early-1970s downturn they flew with too few passengers.

By 1975 the cash was so short that TWA sold six 747s to the Iranian Air Force to meet its payrolls. A flight attendants’ strike and the fuel prices that followed the Arab oil embargo made it worse.

Then came the Airline Deregulation Act of 1978. Fares and routes were opened to competition, and TWA had neglected its domestic network just as that market was growing fast.

It also lost its planned Kansas City hub. Kansas City International opened in 1972 with TWA’s gates meant to sit close to the curb, a layout the new central security checkpoints made obsolete. When the city would not rebuild, TWA began moving its domestic hub to St. Louis in 1982.

1969 to 1986: the most-targeted US airline

TWA flew to Israel, had a large European network and was seen as an American flag carrier, which made it a target. Six TWA airliners were attacked between 1969 and 1986:

• 1969, Flight 840: Leila Khaled and a second PFLP member hijacked a Rome to Tel Aviv Boeing 707 to Damascus and blew up its nose. No one died; two hostages were held for two months.
• 1970, Flight 741: Hijacked after leaving Frankfurt for New York and flown to Dawson’s Field in Jordan, where it was destroyed along with two other hijacked airliners.
• 1974, Flight 841: A bomb in the cargo hold brought down a Tel Aviv to New York Boeing 707 over the Ionian Sea, killing all 88 aboard.
• 1976, Flight 355: Croatian separatists hijacked a LaGuardia to Chicago Boeing 727 to Paris. The bombs on board were fakes, but one they left in Grand Central Terminal was real and killed NYPD officer Brian Murray.
• 1985, Flight 847: Hijacked out of Athens and flown back and forth between Beirut and Algiers. Hezbollah hijackers beat and murdered U.S. Navy diver Robert Stethem; the destroyer USS Stethem is named for him.
• 1986, Flight 840: A bomb blew a hole in a Boeing 727 approaching Athens, and four passengers, including a small child, were blown out of the aircraft. Captain Richard Petersen landed the damaged jet safely.

None of these were TWA’s fault, and they did not bankrupt it on their own. They did keep the airline’s name tied to danger on the routes where it earned the most.

1985 to 1993: Carl Icahn

Trans World Corp. spun the airline off in the early 1980s, leaving it short of capital. In 1985 TWA’s board agreed to sell to Frank Lorenzo’s Texas Air, but the unions, wary of his record with non-union carriers, offered concessions to back corporate raider Carl Icahn instead.

Icahn won and made himself chairman. In 1986 TWA bought Ozark Air Lines for $250 million, lifting its share of St. Louis passengers from 56.6% to 82%, and in 1987 Icahn moved the head office to buildings he owned in Mount Kisco, N.Y.

In 1988 he took TWA private. He made $469 million on the deal, and TWA took on $540 million of new debt.

To raise cash he sold assets, and the most valuable was TWA’s London Heathrow network. American Airlines paid $445 million for the routes in 1991.

TWA filed for bankruptcy on January 31, 1992. In the settlement Icahn paid TWA $150 million, employees took a 15% pay cut, creditors forgave $1 billion of debt, and Icahn was gone by 1993.

He left one more problem behind. As part of his exit, a company he controlled, Karabu Corp., won the right to buy TWA tickets at 45% off published fares until 2003 and resell them through Lowestfare.com.

TWA could not control its own pricing on busy routes while Karabu held cheap seats on them. American Airlines later estimated the deal cost TWA about $100 million a year.

1993 to 2001: employee owners, Flight 800 and the sale

When TWA came out of bankruptcy in November 1993, its employees owned 45% of it. Jeffrey Erickson became president in 1994 and moved the headquarters to St. Louis, where TWA put its name on the Rams’ new stadium, the Trans World Dome.

The Karabu deal forced a second bankruptcy on June 30, 1995. TWA was out by August with $500 million of its $1.8 billion debt gone and employee ownership cut to 30%.

On July 17, 1996, TWA Flight 800, a Boeing 747 bound for Paris, exploded off Long Island and killed all 230 people aboard. The NTSB concluded that fuel vapor in the center fuel tank ignited, most likely from a short circuit, and coverage dwelt on the fact that the jet was 25 years old.

TWA responded by ordering 125 new aircraft, including the Boeing 757, 767 and 717 and more MD-80 series jets. By 1998 it was mainly a domestic airline built around St. Louis, and its European network eventually shrank to London and Paris.

It was not enough. In January 2001 TWA agreed to sell to American’s parent, AMR Corp., and filed for bankruptcy the next day so the sale could go through the court, which picked American over a rival bid from Jet Acquisition Group.

American completed the purchase of substantially all of TWA’s assets in April 2001. Bookings under the TWA name ended on November 30, 2001.

On December 1, 2001, TWA chief executive Captain William Compton flew the ceremonial final flight, Flight 220 from Kansas City to St. Louis, in an MD-83 painted in a special livery called “Wings of Pride.” That night, workers swapped TWA signs for American ones across the country.

Why did TWA go out of business?

No single event killed TWA. It was a long chain: a jet order its owner could not pay for, a 1970s fleet bigger than its traffic, a domestic network too thin for deregulation, a leveraged buyout that loaded it with debt, and the sale of its best international routes.

Three bankruptcies in nine years left no money to replace an old fleet, and Flight 800 turned that fleet into a headline. By 2001 TWA had nothing left to sell but itself.

What is left of TWA today

American laid off many former TWA employees after the September 11, 2001, attacks. In November 2003 it cut about 200 flights from St. Louis, and in 2009 it announced it would close the hub altogether.

In November 2015 American painted a Boeing 737-800 in TWA colors for its heritage fleet. The last aircraft that had actually belonged to TWA, an MD-83, retired in September 2019.

The best-known survivor is the building. Saarinen’s TWA Flight Center closed in 2001 because it could not handle modern aircraft, and on May 15, 2019, it reopened as the 512-room TWA Hotel, with a restored Lockheed L-1649A Starliner parked outside as a cocktail lounge.