Returning home from your job as a financial analyst covering the airline industry, you find a message from your father, a veteran pilot for TWA. He will be in town this evening and would like you to join him for dinner. He needs your investment advice. Having been with TWA during the company’s two trips to bankruptcy court, he is ecstatic over an article in today’s issue of The Wall Street Journal.
TWA announced net income of \($623.8\) million for the year, compared to a loss of \($317.7\) million in the prior year. At last the company seems to have recovered from its financial difficulty.

As a TWA stockholder, your father is wondering whether he should purchase more of the company’s stock and whether TWA might start paying dividends again now that it is profitable.
He thinks the pilots’ union might recover some of the wage concessions that it made during the bankruptcy process. Given the age of TWAs fleet (about 18 years), he hopes that some of the profits might be used to buy new airliners.
As you finish reading the news article, you realize that dinner is less than two hours away.
What advice do you have for your father?

St. Louis—Trans World Airlines, helped by a big gain from retiring debt, posted 1993 net income of \($623.8\) million compared with a year-earlier loss of \($317.7\) million.
Before the \($1.08\) billion gain, TWA’s 1993 loss widened to \($451.8\) million from \($317.7\) million in 1992. TWA, which emerged from bankruptcy-law proceedings last November, said the gain reflected a debt-for-equity swap that was part of its reorganization plan. Creditors received a 55% stake in TWA for forgiving about \($1\) billion in debt.
The airline’s operating losses, before taxes and credits and charges, were \($281.3\) million in 1993 and \($404.6\) million in 1992. TWA’s revenue fell 13% to \($3.16\) billion from \($3.63\) billion, as the company reduced its airline operations about 15% beginning in the fall of 1992.
The carrier didn’t break out fourth-quarter results, saying there is “no meaningful comparison” with the year-earlier figures. Because of its emergence from Chapter 11 protection from creditors, TWA said its financial statements were prepared on both a pre- and post-reorganization basis for different parts of the fourth quarter.
The company’s load factor, or percentage of seats filled, slipped to 63.5% during 1993 from 64.7%. TWAs yield, or revenue per passenger mile, increased to 11.35 cents in 1993 from 10.22 cents the year before.