Truce In T.W.A.

Like fighters after a 15-round draw, both sides thought that the battle for T.W.A. had gone far enough. Company President Jack Frye finally realized that T.W.A. could not get the money it needed without the cooperation of majority stockholder Howard Hughes. And headstrong Howard Hughes realized that he could not try CAB's patience much longer with his obstructionist tactics.

So Hughes sat down last week to discuss a compromise with his onetime friend Jack Frye. Present at some meetings of the three-day peace conference was CABoss James M. Landis. He pointedly reminded Hughes and Frye that a major airline was something of a public utility which private individuals could not kick around with impunity. After a final six-hour session, Hughes agreed to lend T.W.A. $10,000,000 (through his Hughes Tool Co.) and back Frye's plan to authorize a new issue of 2,000,000 shares of T.W.A. common stock.

But Hughes drove a hard bargain. His terms: the new loan was to be convertible into T.W.A. common stock at any time (thus enabling Hughes to preserve his control of T.W.A., even if the rest of the newly authorized stock is sold), and the Hughes Tool Co. was to name some new members to T.W.A.'s board of directors. After accepting the terms, Frye declared that Hughes was once more 1) his friend, 2) his boss.

On the surface, the settlement looked like a victory for Hughes. But most airmen considered the settlement little more than an armed truce. Reason: the $10,000,000 loan could keep T.W.A. flying along for a few months, but it still needed at least another $40,000,000 to pay for new equipment on order and get back into smooth air. (The price of T.W.A. stock, which held its own while Hughes and Frye were battling, fell 2 7/8 points the day after they came to an agreement.)

There was little chance that T.W.A. would try to market its newly authorized stock issue in the present market (even if the issue could be floated in the current bad market, it would probably bring in only half the money T.W.A., needed). T.W.A.'s best hope of getting $40,000,000 seemed to be to get it from RFC. And RFC stuck to its previous decision (TIME, Jan. 6) not to lend T.W.A. a cent until Hughes agreed to put his stock into a voting trust. If Hughes balked at that the battle would be on again.

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