The Eccentric

Howard Hughes, the billionaire eccentric, has had money and power in quantity. But nothing ever seemed to mean so much to him as his control of Trans World Airlines. A pilot obsessed, Hughes, now 60, once set a coast-to-coast speed record, flew round-the-world in 91 hours in 1938, conceived the Constellation airliner, was badly hurt in two crashes. He bought control of TWA from Lehman Bros, in 1939, becoming the only operating chief of a major U.S. airline who also owned it. After a long series of bitter battles with bankers and managers, he found his airline bogged in debt and was forced in 1960 to turn over the management to hostile trustees. Last week Hughes surprised everybody by making a logical decision: sell every last share in TWA.

It will be quite a sale. Unless Hughes reneges at the last moment, his personally owned Hughes Tool Co. on May 3 will sell 75% of the stock, or 6,584,937 shares, in the nation's second biggest airline (after United). If the pricing is anywhere near last week's N.Y. Stock Exchange close of $80.37 1/2, Hughes will gross well over $500 million. In Wall Street's record books, the secondary offering will rank behind only the Ford Foundation's $658 million sale of Ford stock ten years ago. Hughes stands to net about $400 million on his original investment of some $90 million in TWA. What will he do with the money? Said one top Wall Street banker: "I hope he changes it into pennies and drops it on his toe."

People react strongly to Hughes. "I'm supposed to be capricious, a playboy eccentric," he once said in his squeaky voice. He has been all that. Few men have seen him since 1952. He deals, often in the dead of night, over long-distance telephone lines or in cars parked on lonely roads or in chintzy hotel rooms, where he takes off his shoes, drapes his socks over the back of a chair, and talks in terms of millions.

It wasn't always that way. In his younger days, Hughes actually seemed to seek publicity. The handsome heir to an oil-drilling-equipment fortune, he bought his way into the movie industry, produced Hell's Angels and Scarface, discovered Jean Harlow, personally designed the brassiere that made Jane Russell famous. He was a friend to Lana Turner, Ava Gardner, Katharine Hepburn. Then he steadily became more of a loner. He secretly married green-eyed Actress Jean Peters in 1957. Now they live in a French Regency chateau in Bel Air, surrounded by high walls, bodyguards and rumors.

Missiles & Satellites. Often lost in the legend is the fact that Hughes has scored some remarkable business successes. He has increased his $16 million inheritance to a net worth of at least $1.5 billion. His Houston-based Hughes Tool Co. makes huge profits from leasing and selling drilling equipment, and from selling Hughes helicopters. California-based Hughes Aircraft Co. is a $300 million electronics firm that makes the Falcon missile and fire-control and electronic systems for fighter planes. On top of his TWA holdings, Hughes owns real estate in Phoenix, Tucson, and Culver City, Calif., that is worth an estimated $250 million.

At TWA, he was a visionary pioneer whose unpredictable moods precluded sensible management. Under him, the airline grew far less rapidly than competitors, seldom earned a profit, needed so much money to tool up for the jet age that Hughes had to surrender operating control to the Metropolitan and Equitable Life insurance companies and a group of 15 banks. Though he was too erratic to give TWA the steady hand it cried for. Hughes showed many far-sighted flashes of brilliance: his management did put TWA on the lucrative transatlantic routes and brought in many excellent officers, who tided the company over while Hughes ran through a string of presidents.

The Specter. TWA's present president is not even on speaking terms with Hughes. He is Charles Tillinghast Jr., 55, a onetime assistant Manhattan district attorney under Thomas Dewey. Backed by Chairman Ernest R. Breech and an all-star board including Litton Industries' Tex Thornton, Publisher Jack Howard and former Coca-Cola Chairman William E. Robinson, Tillinghast in 1961 got the financing to equip TWA with jets, shifted TWA's image from a tourist's to a businessman's airline, hired cost accountants who had been trained by Robert McNamara at Ford.

Tillinghast made TWA such a valuable property that it became worthwhile for Hughes to cash in his stock. Said a close Hughes aide: "He's a peculiar guy with a fantastic art for making money. He knew when the time had come to sell out." The company has climbed from a $5,700,000 loss in 1962 to a $50 million profit last year, and the stock has risen by 950% . Hughes might also have been worried that TWA would float additional shares, thus dilute his equity.

TWA may well fly still higher once Hughes is fully removed. As long as the Hughes specter hung over TWA, the line always had to pay more for its money. Now management will sleep better, and it will be able to plan more effectively. The tantalizing question is what Hughes will do with all his fresh cash. Childless, he has no reason to accumulate for future generations. Old associates would not be surprised if he tried to buy another airline.

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