Exec discusses airline's recovery

Trans World Airlines' vice president painted a complete picture of the miraculous reconstruction of his company Wednesday night at Steinberg-Dietrich Hall. Approximately 40 students and faculty members attended the lecture given by Scott Gibson, who graduated from the Wharton School of Business as an undergraduate in 1980. TWA hired him last year to be its vice president of planning and corporate strategy. The event was sponsored by the Wharton Transportation Association. "We chose Gibson as our speaker because of TWA's important 50th anniversary and because it is now a top airline," said Wharton Transportation Association founder Neysan Rassekh, a Wharton freshman. Before Gibson's arrival, TWA was on the verge of bankruptcy after falling from its former position as the nation's top international carrier, Gibson said. However, TWA is now celebrating its 50th anniversary of continuous trans-Atlantic service. And according to Gibson, the airline has regained its position as one of the top U.S. airlines. No other airline flying today has been able to boast such a record, Rassekh said. Gibson began his lecture explaining how, at the start of his tenure as vice president, TWA spent three days below the cash level necessary to liquidate the company. Gibson outlined the tactics that "a new management team" used to stabilize TWA. The first step was to bring in operating profits, he said. TWA's main strategy was to redeploy assets by moving planes and other capital from the money-losing Atlanta market to the blooming St. Louis market. TWA is now based in St. Louis, with a "hub dominance" rate of 70 percent, Gibson said. He added that St. Louis's airport is highly internationally-focused and well-suited for TWA's needs. Gibson also noted that the new management felt TWA had "tired products." "There was no new money invested in the company," he said. "So we introduced the Trans World One Premium Class Service and the Comfort Class." The Premium Class Service has received an award for being the "Best Product across the Atlantic" and TWA's Comfort Class has also met with great success, Gibson said. He also spoke about TWA's restructured balance sheet, new aircrafts and a new, computerized yield management system. "In terms of financial balance sheets, we have gone from the worst of the industry to one of the best, within a year," Gibson said. "While our entire company used to do everything by hand, including ticket-handling and flight-dispatching, we are now catching up with the times and becoming computerized." Gibson also outlined various future strategies he hopes to use, such as alliance partnerships, bottom-up management, removing commission caps and increasing the number of "banks" -- or groups of flights per day -- from St. Louis and other locations. Immediately following the lecture, Gibson opened up the floor for questions. Students asked about everything from the effects of costs upon customers to electronic ticketing. The event concluded with a raffle that gave away two free TWA cash travel rebates. But some members of the audience said they came away from the lecture having learned little. "I came because I am interested in the airline business," Wharton senior Raj Shah said. "However, to somebody keeping up with airline issues, he didn't present anything new." But Shah said he thought Gibson's discussion of in-flight meals -- meals given pre-flight in a bag -- was quite interesting. Others reacted more positively to the event. "This is an especially inspiring story about a young Wharton graduate," Public Policy and Management Professor Elizabeth Bailey said. "[The new management team] really overcame big risks to team up together and save the airline."

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