Thursday, May 16, 2013

Frye's TWA gets a shot in the Arm

Mr. John D. Hertz (Yellow Cab Company, Hertz-Rent a Car) was the prime shareholder of TWA in the 1930’s whom which Jack Frye and Paul Richter had to deal with in company business. This included the acquisition of new airplanes to support President Frye’s vision of a growing and successful airline. By 1939 Jack grew more and more suspicious that he was about to lose control of his airline over Hertz inexperienced ideals for how he thought things should progress. The following is quoted from Serling’s ‘TWA – Howard Hughes Airline’.

The key blowup came not because of Frye, but Richter. Early that year Frye and Richter attended a directors meeting at Hertz’s home in Chicago. By then, Paul was executive vice-president and remained one of the few supporters Frye had on the board. Another was the young lawyer, George Spater, who also was at the meeting and remembers how the volcano erupted.
On the agenda was Richter’s request to install full-feathering propellers on all TWA aircraft. When he brought up the matter, Hertz asked rather tartly, ‘Is it necessary?’
The short-tempered Richter took immediate offense and accused Hertz of impugning his technical expertise. A brief argument ensued, ending when Hertz adjourned the meeting so they could go out to the race track and see a couple of his horses run.
“It was probably a rather innocuous incident”, Spater adds. “I honestly don’t believe Hertz meant to raise a fuss. He actually knew nothing about propellers and probably was more interested in getting the meeting over quickly so they could go to the races. But it was the proverbial straw hat that broke the camel’s back. Richter and Frye were furious and Frye decided to do something about the situation”.
Next, what Jack Frye did was to shape TWA’s destiny for the next two decades. He flew to Los Angeles for a meeting with Howard Hughes.
Frye and Hughes had known each other for year’s prior though not personal friends. There is also some reports they knew each other as kids on the ranches in Texas. More on that in another post. Jack had flown a brief stint in Hughes movie Hells Angels. Partner Paul Richter had also flown in that movie on many sorties. Hughes had also purchased the DC1 from TWA in order to fly around the world but changed his mind for it being slower than the Lockheed 14 Super Electra. He eventually parked the One and Only DC-1 at Burbank airport. He sold the DC1 to the English Viscount, Forbes, who kept it for only four months until he sold it to a French aviation broker. The plane went to Spain’s government registered EC-AAE. Then it went to Iberia Airlines as ‘Negron’ and found itself in the Spanish Civil War. In 1940 the DC1 finally had its last flight as it lost power on take-off and landed wheels up in Malaga Spain never to be repaired or flown again.
Jack Frye had apparently shared his meeting with Hughes to a few trusted associates in later years. In late December 1938 or early January 1939, both Frye and Richter according to Otis Bryan, had met HH at his home. Frye it seems told Hughes that he and others just couldn’t get along with Hertz anymore. “I have an idea you might be interested in buying a airline business?”

They talked about a few different options and other airline offerings they would run for Hughes. The situation was so bad Jack Frye was willing to leave TWA in 1939! The next thing that came up in this meeting from Hughes was the question, “Does Hertz own TWA?” Jack told him he was the largest stockholder with Lehman Brothers. Then apparently with no hesitation Hughes said, “Why don’t we buy TWA, I’ve got the money”. He then instructed Frye to compile a stockholders list.
Why two different accountings of this meeting with HH exist is in question, but George Spaters version of what Jack Frye shared with him about this pivotal meeting with Howard Hughes is a little different. Spater is quoted as saying it was Jack Frye who insisted Hughes purchase TWA. It is said Hughes offered to buy a manufacturing company for Jack to run for him, maybe related to Hughes Tool? Jack must have rejected it because Spater reports the following response:
“I like the airline business” Frye retorted.
“I could by United,” Hughes offered.
“I like TWA, Frye stated.
At this point Howard Hughes must have liked Jack Frye’s determination and business savvy that he told Frye to gather the list of stockholders and send it over right away. By the end of January 1939, Howard Hughes had acquired about 12% stock in TWA, the same as Hertz and Lehman Brothers combined. Frye then approached Hertz with a proxy fight. Hertz with no love for the airline business succumbed and Howard Hughes ended up with 25% of TWA stock. This is when he told Jack to do the deal for the Boeing Stratoliner.
As Serling states, “For better or worse, and there were to be large portions of both, Howard Robard Hughes had become part of the TWA saga – bringing with him the blessing of apparently unlimited financial resources and the curse of unlimited power”.

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