What happened
The C-46 departed from Bergstrom Field on runway 17L while engaged in a glider-tow operation. The aircraft was towing a Waco CG-4A glider when the number one engine began to cut out. The instructor reduced power slightly, which appeared to stabilize the issue temporarily. As the crew approached the point where the glider would be released, the number two engine began to lose power.
The flight crew radioed Bergstrom Field control tower to announce their intention to return with one engine inoperative after releasing the glider. The air traffic controller observed that the engine was on fire and instructed the crew to release the glider immediately. The glider pilot, who had also noticed the fire, initiated the release of the Waco CG-4A.
The C-46 continued toward an emergency landing site, but the crew was unable to extinguish the fire. At an altitude of approximately 750 feet, the instructor ordered the other crew members to bail out. One individual exited the aircraft, but his parachute failed to deploy in time. The airplane struck terrain and crashed in flames following the separation of the number two engine.