A Daring New Flying Machine

Amid industry turbulence, TWA and Texas Air form the No. 2 U.S. airline

Before the drama of hijacked Flight 847 began to unfold last Friday, executives of Trans World Airlines were preoccupied by an equally riveting, corporate development: the birth of a huge new airline company. TWA, which has struggled for the past month to escape Corporate Raider Carl Icahn, agreed to be acquired by Texas Air Corp., which already owns Continental and New York Air. The merger will create the second largest U.S. airline, after United.

TWA's takeover was the latest sign of the turbulence that continues to roil the airline industry. The fare wars set loose by deregulation in 1978 have created...

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