New Life for TriStar

In the rough-and-tumble aircraft industry, where fortunes are made and lost on Government contracts, Lockheed has taken more than its share of tumbles. Over the years, it rolled up $480 million in losses on four military projects. In February, already cash-starved, it ran into even more trouble on its biggest venture into commercial aircraft: the L-1011 TriStar airbus. Rolls-Royce, supplier of engines for the TriStar, went into receivership and the British government refused to finance production of the engines unless the U.S. Government assured it that Lockheed could pay for them.

Now, provided Congress is amenable, Lockheed and its chairman, Daniel Haughton, may have that assurance. Treasury Secretary John Connally announced that the Administration this week will ask Congress for $250 million in a loan guarantee to keep the TriStar project going. The new loans would come from private banks, but would have Government backing and would be as secure as Federal Reserve notes. If Congress goes along, the British are expected to let Rolls-Royce proceed full speed ahead on the RB-211 engines, which were designed specifically for the TriStar air frame. Then 10,000 Lockheed employees working on the TriStar and 14,000 other workers at more than a thousand domestic subcontractors can stop worrying about their jobs.

Corner Grocer. But opposition to the bail-out plan is already forming in Congress, where approval is necessary before the money actually starts flowing. "I will do my best as a Senator to oppose this proposal," said William Proxmire, who figured heavily in the defeat of the SST. House Banking Committee Chairman Wright Patman, who helped defeat the Administration's initial loan proposal to save Penn Central from bankruptcy last year, also has his knife out. Others are opposed to the rescue plan unless, as Indiana's Vance Hartke says, "the corner grocer gets one too."

Mindful of Congress's testiness, Secretary Connally is touching every responsive chord he can reach in his defense of the loan guarantee: jobs, defense, national pride, Anglo-American relations and the future of technology. "We think the price this nation would have to pay if Lockheed went bankrupt entirely justifies this action," he said last week. "Besides, we're gonna have the additional collateral of getting our money out first." One of Connally's biggest selling points is that, unlike the final Penn Central rescue proposal, Government-backed loans to Lockheed will be paid off before the company's other $400 million in outstanding loans.

If the Administration bill is defeated in Congress--or even stalled past the Labor Day recess--the TriStar project may well be doomed. And if TriStar dies, Lockheed executives fear, the company itself has no chance of survival.

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