Against a Lockheed Precedent

Deputy Defense Secretary David Packard went before the Senate Banking Committee last week to testify in favor of the Nixon Administration plan for the Government to guarantee $250 million in loans for Lockheed Aircraft Corp., a sum that would allow Lockheed to complete development of the huge L-1011 TriStar commercial jet and, indeed, could save the whole company. Though Packard dutifully endorsed the idea, his testimony badly damaged its chances in Congress. Fully mindful that other money-losing defense contractors might seek similar Government aid, he warned the Senate Banking Committee against setting the "precedent" of helping "any company that gets into trouble."

The Pentagon's No. 2 man argued lukewarmly that the potential loss of jobs should make Lockheed a special case. But he insisted that if Lockheed went under, the Pentagon would face merely "troublesome" problems rather than a "disaster." Moreover, he estimated that Lockheed must sell "substantially over 300" TriStars to break even, rather than the maximum of 265 projected by the company.

Chiefs of competing aerospace firms are already eying Lockheed as a prospective carcass, deciding just which of its parts and programs would be attractive acquisitions for their own corporations. At least one competitor may have gone even further. According to Senator William Proxmire, McDonnell-Douglas has hinted that it might indemnify three airlines that have ordered Lockheed's TriStar against any down-payment losses--provided they switch their orders to the McDonnell-Douglas DC-10.

This file is automatically generated by a robot program, so reader's discretion is required.