Trans World Airlines (TWA)

TWA's 2001 absorption by American Airlines ended an airline that had defined transcontinental and transatlantic travel for half a century. Howard Hughes had owned it; it had pioneered routes across the Atlantic. TWA's decline illustrates how leveraged buyouts can load organisms with parasite burdens too heavy to survive competitive pressure. Carl Icahn's 1985 takeover loaded TWA with $540 million in debt while stripping assets to pay for the acquisition. This is parasitic extraction—the acquirer fed on the host. TWA sold routes, gates, and aircraft to service debt, each sale reducing the network effects that made the airline valuable. The company couldn't invest in new planes, couldn't compete on routes, couldn't attract premium passengers. TWA filed for bankruptcy three times (1992, 1995, 2001) before American Airlines acquired what remained. The final mechanism failure was hub vulnerability. TWA's hub at St. Louis was geographically central but economically peripheral—not large enough to generate sufficient local traffic, not positioned to capture the coastal business travel that provided premium fares. When American Airlines acquired TWA, it systematically dismantled the St. Louis hub, demonstrating that hubs without local demand are parasitic rather than productive. TWA's story shows how private equity and corporate raiders can destroy century-old institutions. The airline that Hughes built became financial engineering material, its aircraft and routes harvested to pay debt until nothing remained but a brand sold for spare parts.