So, do you think TWA (TWA) has enough cash to make it through the winter?

If I had a dime for every time I was asked that question last year, I wouldn't have to write columns for TheStreet.com anymore. I could just retire to the south of France or the hills of Tuscany and think back fondly on my days at TSC.

Alas, I was not smart enough to demand those dimes last year, so I am back today to take another look at the St. Louis-based carrier that I dared to go bullish on in October of last year. That act caused one TSC reader to write me the following: "My partner almost had to call 911 -- he was afraid I would never recover from the shock."

Yes, well. The stock was trading at around 7 and change then, and Wednesday the stock closed up 3.4% to close at 13 3/8. I have no complaints. And last time I heard, our reader was now kicking himself for considering 911 at 7 and change.

So -- now the question I need to start collecting my dimes on is not whether TWA is going to make it through the winter, but: What's next for TWA? The issue is no longer one of mere survival but one of strategic planning.

Let's look at what has changed at the carrier.

  • Debt Structure

    The biggest change over the last four months at TWA is a new and vastly improved debt structure. Thanks to a very impressive blitzkrieg on the debt markets in December, TWA saw a net cash infusion of about $148 million last quarter. In addition, TWA also freed up an additional $200 million in collateral value -- a nice liquidity cushion. So, yes -- it definitely made it through the winter. It made it through the winter just fine.

  • The Quest for the Business Traveler

    The carrier made the strategic decision last year to aggressively go after the higher-yielding business traveler. And it appears to be succeeding. TWA continues to show positive trends in load factor, yield and unit revenue figures -- a trend that has been helped both by the retirement of older aircraft, and the introduction of nifty little business-traveler grabbers such as TW First. TW First is an update to the carrier's first-class domestic service, and includes more first-class seating and access to the airline's Ambassador Club.

    In fact, word of mouth is so strong on the new product that TWA reported on its conference call last Friday it has seen substantial yield benefits from the program in markets where it has already been implemented -- even before the program has been promoted openly there.

  • Management

    I continue to be impressed with Gerry Gitner, TWA's CEO. You will recall that Gitner was basically drafted into this position from the TWA board a year ago when no one else in the industry would touch it. He has done one heck of a job. Mike Palumbo, TWA CFO, and Don Casey, VP of marketing, are also two key management players whom I have been very impressed with.

    Interesting that on the conference call this past week, Gitner gently corrected a reporter who questioned him about continued "cost-cutting." He explained that TWA is not "cost-cutting" -- it is creating a much more desirable product and making sure the airline delivers on its promise. Yes, the airline has to trim its costs -- but this management team also knows that there has to be a good revenue producing product on the other side. Ah -- if only Gerry had been at the helm of Delta Air Lines (DAL) the last few years.

    Wing Tips' assessment? TWA should report a flat to slightly down first quarter, but should have a good second and third quarter. I think there is room for some continued upward movement in the stock. The carrier is concentrating on improvements internally, and at the same time is on the prowl for innovative marketing link-ups. Its announced codeshare last week with Delta Air Lines on Delta routes to Japan is an example.

    Merger? Buyout bait? What is the long-term view? TWA is certainly a player. But right now, the carrier is concentrating on rebuilding -- and it is doing an excellent job. But to do what? Truth is -- I'm not sure. And you know what? I don't think it is either.

    ***********

    Wing Tips Notebook

  • Pan Am (PAA) stock continues to free fall. And I mean big time. Over 2.9 million shares traded hands Wednesday, with the stock closing down 36% to end the day at 7/16. The vultures are circling.

  • A little subset of the airline industry we are looking at of late is that of freight forwarders. You know how much we like the cargo boys. Well, these smaller players in the air cargo industry are posting some impressive gains as well. Names? Here's one. Expeditors International of Washington (EXPD). Wing Tips will take a closer look at EXPD in the near future.

  • Oh, Canada! Air Canada (ACNAF) reported record earnings Thursday morning. However, the stock is trading down around 4%-5% on the news. Air Canada posted pretax income that was more than triple its figure in 1996. Net income was about three times more than in 1996. Earnings per share for the year were $1.31, compared with 4 cents last year.

    Holly Hegeman, based in Dallas, pilots the Wing Tips column every Thursday for TheStreet.com. You can usually find Holly, publisher of PlaneBusiness Banter, buzzing around her airline industry Web site at www.planebusiness.com. Holly welcomes your feedback at hhegeman@planebusiness.com.

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