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Corr Reviews Buckstein Leads '87 Performance on Legal Front Editor's Note: at the December Shareholders Meeting in New York, D

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Corr Reviews Buckstein Leads '87 Performance on Legal Front Editor's Note: at the December Shareholders Meeting in New York, D _VOLUME 51 NUMBER 1 JANUARY 15, 1988 Corr Reviews Buckstein Leads '87 Performance On Legal Front editor's note: at the December shareholders meeting in New York, D. Joseph Corr, TWA president and chief operating officer, presented the following review of TWA. At last year's annual meeting, we reviewed the problems which faced TWA, and we discussed our plans to overcome these problems with the expectation of returning Mark A. Buckstein is senior vice president-external TWA to sustained profitability. This year, I am pleased to report that we have made affairs and general counsel for TWA. He holds a law tremendous progress, and are continuing to move ahead with added plans to improve degree from New York University, 1963, and is a the quality of our service as well as profitability of the company. special law professor at Hofstra University School At last year's meeting we anticipated the acquisition of Ozark Air Lines. Not only of Law. was this accomplished, but we are pleased to report that Ozark has been completely integrated into._TWA's operation, and we are now enjoying the bottom line benefits He joiried TWA on February 1, 1986. This interview of this acquisition. We are particularly proud of the expeditious fashion in which this was conducted in December at his 605 office. integration was accomplished, particularly in light of the problems experienced by other carriers when they have attempted to combine operations of two separate airlines, each with its own culture, union agreements and operating system. We promised that Mr. kahn and the new management of TWA was dedicated Employees with questions for Mr. Buckstein should send them to the SKYLINER, to improving the quality of the product we offer the traveling public. Again, I am proud TWA, P.O. BOX 10007, St. Louis, MO 63145. The letter must be signed, though your to report that tremendous progress has been made in all service areas. We are par­ name will be held in confidence by the editor if you request it. Unsigned letters will ticularly proud of the improvement in on-time performance - currently 90 % of our be discarded. Questions will be answered in future editions of the SKYLINER. flights, by DOT statistics, leave within 15 minutes of schedule and 80% arrive within 15 minutes of schedule. In addition, mechanical reliability, baggage handling, in-flight Q: "Discuss the size of your .department and its responsibilities." service, and the operation of our St. Louis hub have improved substantially. A: "We have a staff of about 50. It includes 22 lawyers, various accountants, legal Earlier this year, the FAA completed an indepth audit of our operations and we assistants, clerks, legal secretaries and other support personnel. The department is were pleased that they concluded TWA was running a very safe airline. As a result, broken down into six different divisions. Five of those divisions are located at 605, we were assessed one of the lowest fines in the industry. This indepth safety audit con­ and one at Kansas City. firmed our notion that you can run an airline in an efficient, cost effective manner and meet the highest standards for safety and reliability. I am constantly amazed at how "The five at 605 include the Corporate Finance/Securities Division, headed by our effective people can be if given the opportunity to perform up to their capability. And Corporate Secretary and Associate General Counsel, Marsha Hewitt, that deals with we, in TWA's management, believe a large part of our responsibility is to be sure that finance matters, securities matters, and various filings with the SEC. Our Contracts Divi­ facilities arrangements, contracts with the our people have the tools and systems to get the job done without interference from sion, headed by Suzanne Clarke, handles of services and products. layers of bureaucracy. various airports and terminals, and contracts with suppliers and administers all Our hard-nosed approach to routes and destinations has made a substantial con­ Our Litigation and Labor Division, headed by Lou Voog, handles Our Regulatory Division, tribution to the bottom line. In the last two years we have ceased operations to 24 non­ of TWA's litigation matters including labor-related litigation. as well as other profitable destinations. At the same time we have explored new destinationsaggressively headed by Norm Kenyon, deals mostly with the DOT and FAA matters generals and have added 31 new destinations to our route structure. Our aggressive move into governmental agencies and consumer affairs matterswith the various attorney headed by Lynn Kenner, the Florida market, from both New York and our major domestic hub in St. Louis, of the 50 states. The fifth group at 605, our Tax Division, through its tax returns. is making a substantial contribution to improving our financial performance during the handles all of TWA's tax work from its tax planning winter months. As the impact of international terrorism waned, we have added back "The final division is in Kansas City, another Contracts Division, headed by Jim international flying with excellent results. In addition, we have added new international Mollenkamp, and it does work unique to the Kansas City maintenance operation as destinations to Scandinavia and Berlin. The net effect of these actions is a 24% im­ well as other general contract and aircraft work." provement in domestic traffic for the first 9 months of 1987 vs. 1986. International "Is there any outstanding case of interest to employees though it might not get a traffic for that same period is up over 22 % . Q:lot of national press attention?" Our strategy to renew our fleet, while at the same time avoiding the huge risks associated with a major aircraft order for delivery many years in the future, appears A: "The one case of unique importance is the Howard Hughes case, which is stillpend­ to be working. By being prepared to acquire certain types of aircraft should the original ing after 30 years. It is a legacy for me and everyone who has been in this chair before purchaser be unable to step up to his obligation, we have been able to acquire six new me. It deals with his eccentric business dealings during his 20-year rule over TWA. MD-80s and a 767 thus far at very competitive rates. We are coming to the end of the case. It recently was argued before the Supreme Court Last year we discussed the need to broaden the revenue base of PARS, in order of Delaware on appeal from a $48 million award to TWA against the Hughes Estate to keep it competitive with systems provided by American and United. To accomplish and Summa Corporation, the successor to Hughes Corp . We are awaiting a decision . this goal, we concluded a partnership agreement with Northwest whereby they pur­ Whatever the decision, it undoubtedly will be appealed to the United States Supreme chased, for $140,000,000, one half of the PARS system. Work is well underway to Court." bring Northwest onto this system. When completed early in 1988, this will not only Q: "Let's discuss the IFFA cases and their status ." lower our cost, but add revenue as travel agents in areas dominated by Northwest are A: "I spend a fair amount of time with the IFFA cases, but most of the handling is converted to PARS customers. done by outside counsel. The IFFA cases are principally three in number. In the past year we have installed and refined a sophisticated revenue manage­ ment system which allows TWA to meet very low fares without diluting our entire "First is the Union Security or Dues case, which was argued before the U.S. Supreme revenue base. The first test of this new system came during the fare wars last spring, Court on January 12. This case raises the issues of whether or not newly hired flight and as a result of this new system we were able to turn what would have been a finan­ attendants and, for that matter, all other flight attendants, can be required to pay dues cial disaster into a new plus. to IFFA. It also peripherally deals with the overall issue of whether or not that contract the argument, I'm extremely op­ In closing, what I want to leave you with is a sense that the commitments we make with IFFA is still in force and effect. After hearing are very real - under Mr. kahn we do not just identify problems and hope something timistic about our prospects. good will happen to improve the airline. When we see a problem, we attack it head on - and bring all the resources available to us to solve that problem. As a result of continued on page 2 aggressively attacking problems, we have been successful in turning TWA around. At the end of the third quarter of 1987 we had posted the 5th consecutive quarter of record operating income. DECEMBER 1987 MONTHLY TRAFFIC FIGURES L<?oking to the future, we expect to continue our strategy of careful profitable SCHEDULED SERVICES growth. In addition to studying the advisability of a new domestic hub vs. more point­ to-point flying, we have applied for rights to provide inter-German service out of Berlin, DECEMBER 1987 1986 %Change and we expect to add new destinations from our Paris hub. Passengers 1,893,300 1,886, 100 0.4 RPM (000) 2,352,800 2,237,800 5. 1 Looking to 1988, should we see a serious softening of the economy and reduced ASM (000) 4,096,900 3,816,300 7.4 demand for air travel, we will quickly respond by reducing flying to match the available L/F (%) 58.6 however, we do not see that happening.
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