In Extremis

With their pockets turned out, the men who once built 96,000 planes a year last week pleaded for help. The aviation industry was critically ill, they told President Truman's Air Policy Commission*; only a liberal transfusion of federal funds could save it.

The crisis was of prime importance, not only to planemakers, but to everyone in the U.S. The aircraft industry, along with air transport and foreign air routes, was a major instrument of U.S. foreign policy, U.S. defense. Yet plane production has withered away until the current annual rate is only 1,370 planes. Major General (ret.) Oliver P. Echols, president of the Aircraft Industries Association, told the commission that it would be "impossible to provide the 6,000 to 10,000 planes necessary to bring the air forces up to operational [i.e., minimum fighting] level within any period of time strategic considerations might allow." What the industry wanted was a program of at least five years of military production at a big enough rate (probably 3,000 to 6,000 annually) to keep it alive and vigorous.

Too Few Planes. The problems of the industry were complex and many. The $500 million authorized by an economy-minded Congress for development of all types of military planes, including guided missiles, was not enough to keep all the major companies going on a big enough volume to hold their production teams together. Modern aircraft, said Eastern Air Lines' Eddie Rickenbacker, had become so complex that the cost of developing experimental commercial types was now prohibitive, without Government aid. The Government, he thought, should pay most of the cost for the development of new transports. (Douglas Aircraft estimated that the cost of producing its new two-engined DC-9 would be 15 times that of the DC-1, prototype of the DC series.)

Even vital experimental orders had been nipped by lack of cash. Northrop Aircraft wheeled out one experimental ship this week, a jet-propelled Flying Wing. But President Jack Northrop said that the Air Force had had to shelve a 600-m.p.h. 4,000-mile-range guided missile which could have been developed in three years, and substitute one that would go 1,400 m.p.h. but would probably take six to ten years to develop.

Transport and personal planes, it had been hoped, would keep the industry going. But personal planes, by & large, had flopped. Last week, Republic Aviation Corp. discontinued its Seabee amphibian after losing $811 million on 1,060 of them. North American had lost $8 million on the Navion personal plane.

As for transport planes, Lockheed had shut down its Constellation production, if only temporarily, after T.W.A. turned back 14 planes it could no longer afford (Lockheed lost $4.9 million in the first half of 1947). Glenn L. Martin Co. faced big losses on its new two-engined transport, the 3-0-3, after United Air Lines (which had ordered 50 of the 84 ordered) canceled its $16 million contract. Even Douglas, now busy with its DC-6, felt shaky. Douglas' comptroller, Ralph V. Hunt, told the commission of the industry's "losses of record proportions, mounting costs, and a steady shrinking of working capital resources . . . makeshift devices ... to stave off insolvency or bankruptcy."

Too Many Planes. The American transport plane is a vital tool of air power. But the airlines themselves were in a bad way; in the first seven months of 1947, only Eastern and Inland Air Lines managed to make an operating profit. Though September traffic was the greatest in the industry's history, the overall prospect for 1947 was still a loss. The airlines were in no shape to boost the sagging airframe industry; they ruefully informed the commission that they had already overbought on new equipment. All had been caught in the squeeze of higher wage, supply and other costs. And postwar traffic was below their high hopes.

But it remained for Pennsylvania-Central's President C. Bedell Monro to epitomize, in his own person, the predicament of the airlines--and the industry. Monro took twelve pages of testimony to tell the commission that his shaky line needed a Government handout, and fast. But nothing the Government could do was fast enough for Monro. After he got back from testifying, his principal creditors got together and eased him out of the presidency. Operations Manager J. H. ("Slim") Carmichael, 40, onetime pilot, was upped into his job.

* Chairman Thomas K. Finletter, Wall Street lawyer; Harvard's George P. Baker; Publisher Palmer Hoyt of the Denver Post; Dun & Bradstreet's Arthur D. Whiteside; Industrialist John A. McCone.

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