Sharing the Stick

Howard Hughes likes to fly his own eccentric way, but the time came last week to call in a copilot for T.W.A. To make it possible to get a $40 million RFC loan that T.W.A. had to have to keep flying, Hughes agreed to put his T.W.A. stock (46%) into a voting trust, thus share T.W.A. control with the U.S. Government.

This was the last thing stubborn Howard Hughes had wanted to do (TIME, Jan 6). But RFC had been just as stubborn. Some $19 1/2 million in RFC cash had already been sunk in Hughes's experimental, 750-passenger flying boat, the Hercules. And a Senate committee was curious enough about this deal to question Hughes last week to find out what RFC had got for its wad. (Hughes had hopes that the Hercules would fly this year.)

Hughes had tried to get more money for T.W.A. from private sources. But T.W.A., deeply in the red, did not look like a good risk. Whether RFC would lend T.W.A. the money it needed, even with Hughes's new concessions, remained to be seen. But the prospects were good.

CAB Chairman James M. Landis, who has intimated that T.W.A. would fly better without Hughes, did his share of pushing the loan. It "might be wise" said he in a radio interview, for RFC to make a loan "here and there" to help floundering airlines buy new equipment.

Floundering airlines meant more than just T.W.A. Of the big lines, T.W.A. was in the worst shape. But some smaller lines were also in danger of crashing. And all the airlines, hit by a falling-off of traffic due to crashes and abnormally bad winter weather, had had one of the worst Januarys in their history They had been doing none too well before that. In the first eleven months of 1946, the U.S. airlines had shown an estimated net loss of over $900,000 v. a net profit of about $20,000,000 for the same period in 1945.

Deeply perturbed by this slump, CABoss Landis had other ideas for helping the weak flyers. Although CAB has not liked airline mergers, on the grounds that they cut down competition, Landis now suggested that mergers might be the best way to keep some airlines out of bankruptcy. More cheering was a strong hint that increases in passenger and mail rates might be in the offing. CABoss Landis sternly warned that "management inefficiency" would not be underwritten by subsidies or higher rates. But at week's end he ordered an investigation to see if current rates are "unjust or unreasonable."

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