Hours After Company Reports Loss, TWA Chief Calls It Quits
Oct. 25, 1996
ST. LOUIS (AP) _ Just hours after Trans World Airlines Inc. posted a $14.3 million quarterly loss tied to the July explosion of one of its jetliners, the company's chief executive called it quits.
Jeffrey H. Erickson, who had overseen a startling comeback of the once-bankrupt airline, plans to step down in January.
His resignation was announced Thursday, shortly after TWA reported a huge earnings loss for the third quarter, which covered the July 17 crash of Flight 800.
``I have decided that it is time for me to move on,'' Erickson said in a statement. He made no mention of the crash or the financial results. A spokesman at TWA's St. Louis headquarters said he was out of town.
The move caught analysts by surprise.
``I don't know what their dissatisfaction is with Jeff,'' said Louis Marckesano, an airline industry analyst with Roffman Miller Associates. ``Obviously the company feels it has to restart and get going in a different direction.''
The crash of Flight 800 cast a long shadow over the airline. The Paris-bound plane blew up after takeoff from Kennedy Airport, killing all 230 aboard. Its cause remains under investigation.
The airline was widely criticized for waiting 25 hours after the explosion to release a list of passengers aboard the jet.
Management blamed the delay on difficulties reaching the families, but that did nothing to mollify New York City Mayor Rudolph Giuliani, who called TWA management ``abysmal and horrible.''
In announcing the poor third-quarter results Thursday, Erickson said advance and premium-fare bookings fell after the crash. Also, fuel prices rose in the quarter, and the cost of maintenance materials and repairs more than doubled, he said.
``The events of the summer of 1996 have dealt us a setback,'' he said. ``We will redouble our efforts through the remainder of this year and into 1997 to put our rebuilding effort back on track.''
Erickson, 51, engineered one of the business successes of 1995. In June, TWA entered bankruptcy court for the second time. When it emerged two months later, it had $500 million in debt wiped out through a deal with creditors.
On the day of the crash, TWA had reported a 400 percent gain in its second-quarter earnings.
``I am proud of the accomplishments of the people of TWA under my leadership, which included a successful financial restructuring,'' Erickson said.
Erickson came to TWA in April 1994 after serving as CEO of Reno Air, a young start-up based in Nevada. He previously worked at Pan Am, Midway and Continental airlines.
TWA was the nation's seventh-largest airline by revenue last year, and carried nearly 21 million passengers. The airline announced plans in February to hire 2,100 workers this year.
Thomas F. Meagher, chairman of TWA's board of directors, said the board was grateful for Erickson's leadership.
``In 1994, the board gave Jeff a very challenging assignment and he has accomplished much of what TWA set out to do,'' he said.