TWA Hopes to Reduce Labor Costs by 20%

The new president of Trans World Airlines says the carrier hopes to reduce labor costs 20% through a combination of wage reductions and work-rule changes.

“I don’t mean you’ve just got to rip salaries away,” said Richard Pearson, TWA president and chief executive.

Pearson and Frank Lorenzo, president of Texas Air Corp., met Thursday with the editorial board of the Kansas City Star and the Kansas City Times. The two airline companies plan to merge by the end of the year in a $793.5-million deal designed to prevent a takeover of TWA by New York financier Carl C. Icahn.

Lorenzo and Pearson said they expected stockholders and airline industry regulators to approve the TWA-Texas Air merger.

Lorenzo said that, although the deal is expected to increase TWA’s existing debt by about $500 million, the financial situation should be “very manageable.”