Made for Each Other

As an aerial stuntman in the '20s and as a commercial airline pilot in the '30s, James Henry Carmichael earned a reputation for smart flying. Since becoming president of Capital Airlines in 1947, "Slim" Carmichael has shown the same talent for piloting an airline. He took over Capital when it was losing more than $2,000,000 a year, cut costs by slashing his staff to the bone and boosted business by starting cut-rate coach service. In 4 1/2-years, he pulled Capital out of its nose dive, climbed to a $1,756,490 profit in 1951, and cut the line's debt from $14,000,000 to $3,000,000.

Last week Airman Carmichael, now 44, took on a bigger job. After four years of dickering, he signed an agreement to merge Capital with Northwest Airlines and form the biggest (8,089 route miles) U.S. domestic airline system. It is the latest of a series of mergers,* now pending CAB action, designed to strengthen U.S. airlines. If the deal is approved, as expected, Carmichael will become president and operations boss of the new line. Northwest's President Croil Hunter, 58, will become board chairman.

Give & Take. Common stockholders of both lines will get one share in the new company, to be called Northwest-Capital Airlines, for each share they now hold (last price on both Capital and Northwest common: about $16). Northwest's preferred stock will become preferred stock in the new company.

The merger should be a happy marriage. Capital has routes crisscrossing ten Middle Atlantic and Southeastern states, does a lucrative short-haul business between New York, Chicago and Washington. But it gets comparatively few long-haul passengers because they prefer to take transcontinental lines. With Northwest's cross-country flights to Seattle--and its overseas arms to Honolulu and to Japan, Okinawa, Korea, Formosa and the Philippines--that pattern should change (see map). For its part, Northwest would cash in on Capital's Eastern business, and get a transcontinental route through Chicago, which it has long wanted.

Cigarette Money. Both lines will also benefit in equipment. Northwest, which had trouble with Martin 2-0-2s (TIME, April 23), and has now sold or leased them, has a fleet of ten Boeing Strato-cruisers to kick into the fleet. In addition, Northwest and Capital would pool 49 DC-4s, 35 DC-3s, and five Constellations (with seven more on order by Capital).

Big as the deal was, Slim Carmichael was as cool as ever. Once after he had brought a plane in safely on one wheel with one engine ripped off, he described the incident as "nothing to get excited about." Said Carmichael last week after signing the deal: "It was about as casual as if we were buying each other a pack of cigarettes."

*Others: Northeast and Delta (TIME, Oct. 9, 1950), National and Colonial (TIME, Dec. 24), and Braniff and Mid-Continent (TIME, Feb. 4).

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