Northwest Buys Half of TWA’s Booking System

Northwest Airlines will buy a 50% interest in Trans World Airlines’ PARS computerized reservation system, used by thousands of travel agents to book flights, both airlines announced Monday.

The value of the agreement was not disclosed, but it comes against a background of severe financial problems for TWA and efforts by Northwest to expand into the computerized reservation business.

“This agreement, providing TWA with an even more competitive and marketable computer system and related applications, is a major step toward assuring our airline’s profitable, efficient future growth,” TWA Chairman Carl C. Icahn said in a press statement from the airline’s New York headquarters.

Steven G. Rothmeier, president and chief executive of Minneapolis-based Northwest, said in a statement that the agreement “provides the basis for a strong new industry computerized travel agency system by providing the resources for continued expansion and enhancement of PARS and for a larger sales force to market the system.”

No. 3 Reservations Service

PARS is the No. 3 airline-owned computerized booking service behind the Sabre system of American Airlines and Apollo system of United Airlines. Icahn, who took control of TWA earlier this year, had said he might sell all or part of PARS, which analysts estimate is worth up to $400 million.

Of the approximately 22,000 U.S. travel agents that use these systems to book flights for clients, about 40% use Sabre, 30% use Apollo and 12% use PARS.

The systems can make reservations on most airlines and are considered crucial to the industry, because about 70% of all passengers book tickets through travel agents. But some airlines have charged that the systems are often biased so that the owners are most likely to get the reservations.

Under the TWA-Northwest agreement, PARS will be split by Aug. 1 into a services company and marketing company, of which each airline will own half. The services unit will maintain the computer facilities of TWA and Northwest, and the marketing unit will attempt to attract new travel agent subscribers.

Analysts said such an agreement was not a surprise, particularly because of the fragile finances of TWA, which has suffered from industrywide fare wars, declining passenger loads and a costly flight attendants strike.

TWA lost $193.1 million last year.