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✈️ Vintage 1961 TWA Trans World Airlines $1,000 Debenture, the Bond Behind Howard Hughes' Jet Age Fight
Size: 13 1/2" x 9 1/2" ~ Issued and punch-cancelled.
This is real TWA paper from the year Howard Hughes lost his grip on the airline. The face reads TRANS WORLD AIRLINES, INC., 6 1/2% Subordinated Income Debenture, $1,000, due June 1, 1978, and every sheet is dated June 8, 1961. The De La Rue Banknote Company engraved it in deep green. A draped woman sits on a bank of clouds at the top with a globe beside her, pointing off toward the next horizon. Every one was issued to a registered holder and later punched full of cancel holes once it was paid or traded in. I've got several, and each has its own number and holder, so yours may look a touch different from the sheet I photographed.
What the Paper Says
A debenture is a loan to a company with no property pledged behind it, just the company's promise. These go a step further. It's subordinated, which the fine print spells out: it gets paid only after TWA's senior debt is paid in full. And it's an income debenture, so TWA owed the 6 1/2% only in years it earned enough to pay it. Interest came due every June 1 and December 1, payable in the Borough of Manhattan.
The whole issue came to $100,000,000, written under an indenture of June 1, 1961, and The First National City Bank of New York stood as trustee. Every debenture issued before October 31, 1961 carried a warrant good for 2.7 shares of TWA common per $100. The warrants aren't with these. TWA could call them in early starting December 1, 1961, and the redemption table printed right on the face runs from 1961 to 1975. Down at the bottom, the embossed seal says TRANS WORLD AIRLINES INC. around the rim with CORPORATE SEAL, 1934 and DELAWARE inside. That 1934 belongs to the corporation. The paper itself is a 1961 debenture, dated on its face.
How Hughes Lost TWA
Howard Hughes had been TWA's principal stockholder since 1939, and by 1960 he owned about 78 percent of it. He wanted jets. His Hughes Tool Company had ordered a fleet of 63 Convair and Boeing jets meant for TWA, and TWA's first Convair 880s went into service in January 1961. Paying for them was the trouble. A group of banks and other lenders came up with $165 million for TWA's first jets, and what they wanted in return was Hughes out of the driver's seat. His stock went into a voting trust the lenders ran, and in December 1960 the Civil Aeronautics Board signed off on the whole jet financing plan.
This debenture is part of that deal. Hughes Tool promised to take whatever debentures the public passed on. The public offering wrapped up on June 8, 1961, which is the date on every sheet. Three weeks later, on June 30, 1961, TWA sued Hughes Tool. That fight ran all the way to the Supreme Court, which threw out the judgment against Hughes in 1973. Hughes didn't wait for the ending. In 1966 he sold every TWA share he had for $546,549,771.
TWA in 1961
The airline was born in 1930 as Transcontinental & Western Air, out of the Spoils Conference, where the Postmaster General divided up the country's air mail routes. It came out as one of the Big Four, beside American, United and Eastern, and took the name Trans World Airlines in 1950. In the Hughes years the three-tailed Lockheed Constellation carried TWA's red twin globes over the ocean to Europe and on to the Middle East, Africa and Asia. People who flew TWA back then still tell stories about climbing aboard a Connie or a 707 beneath that red tail.
1961 was a busy year for TWA. Charles Tillinghast took over as president. On July 19, 1961, TWA showed By Love Possessed to its first-class passengers, the first regularly scheduled in-flight movie on any airline. For years TWA's headquarters and its big overhaul base were in Kansas City, and in 1962 TWA opened Eero Saarinen's winged Flight Center terminal at Idlewild, the New York airport we know as JFK.
The Trustee and What Came After
The trustee was having a big year of its own. First National City Bank came out of a 1955 merger and later became Citibank. In 1961 it moved its headquarters from Wall Street up to a new tower on Park Avenue, and that February it issued the first negotiable certificate of deposit, a new way for a big bank to raise money fast.
Under Tillinghast the company branched out well past airplanes. By the end of the 1970s its parent, Trans World Corporation, owned Hilton International hotels, Canteen food service, Spartan Food Systems, the biggest Hardee's franchisee, and Century 21 Real Estate. TWA stood alone again from 1984, Carl Icahn bought it in 1988, it went bankrupt in 1992 and again in 1995, it lost Flight 800 off Long Island in 1996, and American Airlines absorbed it in 2001, seventy-one years after it started. The Saarinen terminal is the TWA Hotel today. Collectors get a kick out of the timing, too. These debentures matured in 1978, the very year deregulation turned the airline business upside down.
Hang one in a pilot's den, a travel office or a Hughes fan's study, or give it to somebody who still misses flying TWA. The supply is finite. The airline is gone, nobody will ever issue another TWA debenture, and once the last of these are framed and on walls, they'll be very difficult to acquire.
