Turbulence at TWA

Relations between misanthropic Financier Howard Hughes, 55, and Trans World Airlines, the nation's third biggest air carrier, have long resembled those between a capricious master and a whip-shy dog. In the 17 years since he first gained control of TWA through his wholly owned (and vastly profitable) Hughes Tool Co., Hughes has run through five TWA presidents--some of whom he never bothered to meet--and has put the line through ever fancier financial paces. Last week, as sometimes happens, the baffled dog finally turned and bit.

Hughes's control of TWA began to slip last year, when he ran into trouble with a $165 million financing plan to pay for jets. New York's Irving Trust Co. and Equitable Life finally agreed to lend TWA the money, but only on stringent conditions: Hughes was obliged to place the 78% of TWA's stock owned by Hughes Tool Co. under the control of a voting trust composed of former Ford Motor Co. Chairman Ernest Breech, former U.S. Steel Chairman Irving S. Olds, and Raymond M. Holliday, chief operating officer of Hughes Tool.

Two-Suiter. Undeterred by this rebuff, Hughes set about chivying President Charles Tillinghast, whom the trustees had put in to run TWA. On one occasion Hughes threatened to bring suit against the airline for ignoring his wishes. Last week, instead. TWA's management filed suit against Hughes. Hughes Tool Co. and Raymond Holliday for alleged violation of the Sherman and Clayton antitrust acts. TWA's avowed hope: to win a court order obliging Hughes to get rid of all stock in TWA and to cease trying to exercise control over the line.

Heart of TWA's case is the charge that Hughes tried to force TWA to use Hughes Tool Co. as a middleman on all its jet purchases. To begin with, TWA purchased 20 Convair 880s from Hughes Tool rather than directly from the manufacturer. General Dynamics. Next, charges the TWA complaint, Hughes tried to coerce TWA into agreeing to buy from Hughes Tool 13 Convair 990s (which Hughes had already contracted to buy from General Dynamics). When the Tillinghast team decided instead to buy Boeing 707s, Hughes allegedly sought to queer the deal by warning Boeing that its contract with TWA was invalid because the airline had an obligation to buy from Hughes Tool.

No Return. By week's end, the air was turbulent with allegations and counterallegations. Hughes sought to have the TWA suit dismissed, charging that the lending institutions which now control TWA's finances were guilty of "self-dealing." In a supporting affidavit, Hughes argued that the Hughes Tool Co. actions of which TWA complains were approved by the Civil Aeronautics Board and hence exempt from the antitrust laws--"even if they were applicable.''

Through all of Hughes's counterattack ran the indignant tone of a man wounded by ingratitude. But TWA--a dog that has learned new tricks--shows no signs of coming easily to heel again.

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