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II Record Year in '87'' LEX, ·LGB, Shuttle Set Q/A With Mark Mulvany New service to Lexington and a new 7 a.m. through 8 p.m. plus 6:20 a.m., Record "TWA Shuttle" between St. Louis and 1:08 p.m., 3:30 p.m., 5:45 p.m. and II Chicago open on the June 1 schedule. 8:15 p.m. The STL-ORD market is The approaching August 1 schedule in­ considered the 40th busiest city-pair in cludes new service to Long Beach. the industry. Year The Lexington service has four flights To Long Beach, one-stop service on from St. Louis. All service will be on the August 1 will be upgraded with an addi­ DC-9 fleet. Three one-stops through tional nonstop on September 14. De­ In '87'' Louisville and one nonstop are planned parting St. Louis at 6:45 p.m. on exist­ Mark S. Mulvany has served as senior with the same return pattern. Flights will ing Flight 211 nonstop to Orange Coun­ vice president, finance, since 1986. He depart St. Louis at 7:05 a.m., 1:28 p.rry., ty, it will continue to Long Beach for a is responsible for the airline's computer 4:57 p.m. and 8:27 p.m. Returns leave 9:32 p.m. arrival. Returning from Long systems, programming and communi­ Blue Grass Field at 9:30 a.m., 12:30 Beach at 8:15 a.m., the nonstop flight to cations; accounting and credit opera­ p.m., 5 p.m. and 8:13 p.m. Nonstop Ontario will continue on the existing tions; contract services; insurance; flight time is 65 minutes. #414 to St. Louis for a 2:37 p.m. arrival. materials services and controls; financial The new "TWA Shuttle" establishes The nonstop schedule shows #321 planning and reporting; and internation­ an hourly departure plan from St. Louis departing St. Louis at 11:10 a.m. and ar­ al finance. to Chicago. Four roundtrips have been riving in Long Beach at 1:02 p.m. The He joined TWA in 1967 as a systems added to the market, bringing the total return departs as #320 at 2 p.m. and ar­ analyst. He has held several manage­ to 19. STL-ORD departures are hourly rives in St. Louis at 7:29 p.m. ment positions, including vice president, accounting and credit operations from 1981 until his current appointment. Air Boutiques Open Employees with questions for Mark Mulvany should send them to the SKYLINER, TWA, P. O. Box 10007, St. Louis, MO 63145. The letter must be products McHugh. president of TWA Marketing TWA began May 9 selling signed, though your name will be held in confidence by the editor if you request and certain Services. Inc. "In fact. TWA was the first on board transcontinental it. Unsigned letters will be discarded. Questions will be answered in future edi­ flights. The opening of to show movies in flight 25 -years ago other widebody tions of the SKYLINER. Ambassador Boutique shops on TWA's when the jet age began. Now every air­ domestic flights marks the first time a line has movies." Q: "Operating revenues increased 24 percent in the first quarter compared to the comprehensive line of products has Ambassador Boutiques will be on all same 1986 period. What were the significant factors involved in this increase?" been offered on U.S. flights. Potentially. of TWA's transcontinental flights from A: "There are a number of important factors. I should first point out that this im­ up to 10.000 passengers a day will be New York Boston, Washington. D.C.. provement was achieved despite a corresponding decrease in capacity and the in­ exposed to the product offers on these Philadelphia. San Francisco. Los An­ troduction of a new low discount fare, MaxSaver. The establishment of a yield man­ flights. geles. Seattle. San Diego: between St. agement group last year appears to be paying dividends. Among the items passengers will be Louis. New York. Los Angeles and Hon­ "Other principal factors are that 1986 data does not include Ozark which had able to purchase and take home are olulu and San Juan: flights between approximately $120 million in revenue in the first quarter report. Also, TW.P\sreve­ Kodak cameras, Travel Trivial Pursuit, New York and Phoenix. and between nues were substantially depressed a year ago as the fear of terrorism significantly Swatch watches, Majorica pearls, Lorus New York and Denver. reduced not only the international traffic but also affected some domestic feed as travel alarms, Cross pens, model air­ "I have long wanted to take ad­ well. Finally, the 1986 IFFA strike caused TWA to cut flights initially and even planes, Bausch & Lomb sunglasses, vantage of our expertise in inflight ser­ though service returned to normal within a few days, fares were abnormally dis­ electronic calling cards, Totes mini-um­ vice and duty-free international sales counted to attract passengers back to TWA." brellas, silk Burberry scarves, and Travel areas of our airline." Carl Icahn. chair­ Q: "Can you measure the amount of revenue lost due to the adverse factors af­ Scrabble. man said. "Not only do our passengers fecting 1986." "TWA has had many inflight innova­ receive an added benefit. our flight at­ A: "Stnce the adverse factors occurred simultaneously, it is not possible to tions over the years." said Peter T. tendants are proud of the products." measure the impact of each factor. Compared to the original forecast for the year 1986 actual revenues were down more than $800 million. Actual revenues also dropped $600 million from the $3.7 billion in revenues for 1985." Q: "How has yield been affected by the low MaxSaver fares - hasn't yield actual­ ly improved year-over-year?" A: "You're right; the MaxSaver fares significantly diluted yields in the first quarter although management of the fare in specific markets actually resulted in revenue improvement versus our Plan. Two factors mitigated the yield dilution impact on year-over-year comparisons. First, yields were superficially low last year because of discounting in order to retain business. Also, Ozark's high yield markets have meas­ urably improved TW.P\s year-over-year performance. Domestically, our yield is off about one penny from where we want it with most of the problem centering on the MaxSaver; however, we are making it up on traffic increases. "Unfortunately, traffic gains as opposed to yield improvements directly affect certain expense elements such as staffing levels, food, denied boarding payments, lost baggage claims, etc., and represent costs that will continue until the expiration of the MaxSaver on May 21. This summer we should see substantial revenue gains versus a year ago and assuming expenses remain under control, we should be look­ APRIL 1987 MONTHLY TRAFFIC FIGURES ing forward to record results for the remainder of the year." Q: "Can you compare the domestic versus international traffic for the quarter?" SCHEDULED SERVICES A: "Most of the increase achieved during the quarter was in the domestic opera­ tion. The second and third quarters will show strong international increases and APRIL 1987 1986 %Change healthy profits. Our reputation as having an unprofitable domestic operation is Passengers 2,157,300 1,454,200 4RO changing due in part to a decision last year to shift capacity to the Hawaiian, Carib­ RPM (000) 2,723,200 1,902,000 43.0 bean, and Florida markets as well as the Ozark purchase. Barring unforeseen ASM (000) 4,064,400 3,708,100 10.0 events, we should experience a substantial profit improvement in 1987 and I believe L/F (%) 67.0 51.3 1988 will be even better." Q: "Salaries, wages, and benefits were up only 2 percent in the first quarter. Are YEAR-END 1987 1986 %Change you satisfied with this relatively mild increase?" Passengers 7,750,900 5,543,100 40.0 A: "Yes since salaries represent about 38 percent of our operating costs, it is es­ RPM (000) 9,461,200 7,509,000 26.0. sential that continued emphasis be given to ensure control of this expense area. ASM (000) 15,247,700 13,858,000 10.0 I believe we are in an excellent competitive posture for the next two years. During L/F (%) 62.1 54.2 the first quarter, TWA operated the combined two airlines (TW and OZ) with about 3,000 fewer employees than the carriers did separately. Ozark employed about (NOTE: 1986 figures do not include Ozark) 4,100. Current employment, including the international operations, is approximate­ ly 30,000. The above savings takes into consideration the 600 people transferrred to the new PARS companies. (next page) "Keep in mind that the net savings includes increases in employment levels in "Concerning this first quarter, we lost $55 million compared to a $170 million certain departments to repair all of Ozark's DC-9 engines and its MD-80s which loss in the same period 1986. That is a dramatic improvement. My guess is that brought about 250 more mechanics to the Kansas City Overhaul Base as well as we will hold or even improve our position relative to the industry in coming staffing increases of over 300 people in St. Louis needed to implement a "zone" months." concept at the stations in early January. Q: "With this drive toward lowering expenses, do you fear we will get an image "Payroll savings were achieved primarily in the staff areas as should be the case as a cut-rate airline?" when any two companies are combined." A: "Not at all.
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