The poor prospects for the Space Shuttle, midway through 1971, emerged within a broad and sweeping downturn within the aerospace industry as a whole. This industry has long been highly cyclical. For instance, orders for military aircraft have soared during wars and Air Force buildups, only to fall off sharply in times of peace. The nation's aerospace efforts have also included major activities in civil aviation and in space flight, which at times have tended to counteract downturns on the military side.
During the early 1970s, however, all three of these industry components went into downturn simultaneously. The waning of the Vietnam War brought a sharp falloff in military procurement, which dropped from $23.3 billion in 1968 to $18.4 billion only three years later. The waning of Apollo led to a similar falloff in NASA employment, which plunged from 394,000 in 1966 to 144,000 in 1971. The nation as a whole went into a recession during 1970, which caused new orders for airliners to dry up as well. This brought extensive layoffs at Boeing, along with severe distress within its home city of Seattle. [Astronautics & Aeronautics, February 1972, p. 27; NASA budget data, February 1970.]
Total aerospace employment reached a peak of over 1.4 million in 1967. It then slid downhill very rapidly, dropping to 900,000 in mid-1971. Employment of production workers fell by nearly 50 percent, from nearly 800,000 to just over 400,000. It was nearly as bad for scientists and engineers, as their ranks dwindled from 235,000 in 1968 to 145,000 four years later. [Astronautics & Aeronautics, February 1972, pp. 27, 28.]
Much of this was unavoidable. The nation certainly was not about to keep the NASA and military programs at 1967 levels merely to maintain full employment within the industry. In addition to this, the layoffs at Boeing stemmed from a cyclic downturn in civil aviation. Indeed, the aerospace recession cut deepest on the commercial side. Three programs held particular significance: the Boeing 747, the supersonic transport (SST), and the Lockheed L-1011. The SST and L-1011 also brought unprecedented forms of federal involvement in commercial planebuilding. [Discussion of these three programs, within the present chapter, generally follows Heppenheimer, Turbulent, chapters 8 and 9.]
This involvement proved highly controversial, and led to a series of close congressional votes during 1971. These votes made it clear that neither Congress nor the Nixon Administration would sit back and allow major aerospace corporations to wither on the vine. Rather, despite heated controversy, Washington would step in to offer support. With this, the prospects shifted for aerospace, and for the Shuttle. With the industry taking its lumps, it lost something of its reputation as a recipient of undeserved largesse. This made it politically feasible to support the Shuttle, not with interim funding from one year to the next, but as a long-term national effort.
The background to the 747, and the source of most of its troubles, lay in its engines. These were of a new type, known as the high-bypass turbofan. In contrast to earlier jet engines, which had the long and slender shape of a cigar, they introduced an enormous and gaping mouth, with a very large rotating fan in the front. This arrangement produced high thrust with relatively low noise with excellent fuel economy. The term "high-bypass" reflected the fact that most of the air blown by the fan would bypass the engine core, allowing the fan to act as a high-speed propeller. [NASA SP-468, pp. 225-227; Newhouse, Sporty, pp. 111-112; Eight Decades, p. 152; Bathie, Gas Turbines, pp. 167-170.]
During the mid-1960s, the Air Force held a burgeoning interest in such engines, which were to power transport aircraft of unprecedented size. These would support the policy of Defense Secretary Robert McNamara, whereby the U.S. was to build up its airlift and sealift capacity to be ready to carry troops and equipment wherever America might choose to intervene. In August 1965, the Air Force picked a high-bypass design from General Electric, the TF-39, and marked it for development. Mounting a fan with diameter of eight feet, this engine was to produce 40,000 pounds of thrust. [Newhouse, Sporty, p. 113; Eight Decades, p. 131; Rice, C-5A, p. 3.]
A month later, in September, the Air Force awarded a contract to Lockheed for the C-5A, the transport that this engine would power. Newsweek later referred to this aircraft as Moby Jet. Placed within a football stadium, it would stretch from the goal line to the opponents' eighteen-yard line. Its wings would overhang both teams' benches. Its cargo would accommodate heavily-armored tanks. Fully loaded, its weight of 769,000 pounds would double that of the largest commercial jetliners. [Rice, C-5A, p. 1; Pedigree, p. 57; NASA SP-468, p. 497.]
Douglas and Boeing had competed with Lockheed for this award, coming forth with similar designs. At Boeing, the immediate question was how to turn such a concept into something that looked like an airliner. For several reasons, the C-5A as such would not do. It was too big; it could carry far more passengers than the market would provide. Its planned cruising speed, 506 mph, would also be too slow. It would be costly to operate, and its design was to emphasize the military requirements necessary for operation from short and unpaved landing strips rather than from hard-surface airports. Nevertheless, Boeing's work on the C-5A offered a basis for an airliner that took shape as the 747. [Rice, C-5A, p. 2; Daley, Saga, p. 435; Aviation Week, April 26, 1965, pp. 35-38.]
Right at the start, this project held the strong interest of Juan Trippe, chairman of Pan American World Airways. Pan Am was the nation's leading overseas carrier. While it held no domestic routes, in its chosen realm of international travel, it carried more passengers than all other U.S.-flag airlines combined. Within the aviation industry, Trippe was a power in his own right. He had single-handedly launched the jet age, in October 1955, by placing a $269 million order for Boeing 707 and Douglas DC-8 jetliners. Now, a decade later, he had the strength to launch the 747. [Lehman Brothers, Prospectus (Pan Am); Daley, Saga, pp. 411-412.]
His vice-president of engineering, John Borger, began talking with Boeing officials on the very day that Lockheed won the C-5A. Now, by prearrangement, Boeing's advanced-design policy shifted focus to the 747. The group's manager, Joseph Sutter, knew he would head up the new project as soon as the Air Force gave the C-5A to Lockheed. Market projections also favored the 747 — and called for it to be huge in size.
As the Boeing vice-president John Steiner describes it, aircraft are designed to fit the market four years after they enter service. For the 747, that was to be 1973 or 1974. Traffic had been shooting up for several years at annual rates of increase of 10 to 12 percent; lately those rates had gone up further. Pan Am, carrying nearly six million passengers in 1965, would top the ten million mark only four years later. Yet, if one projected no more than that, growth rates would stay below 12 percent, then airliners delivered in 1970 should accommodate 350 to 375 people. [Newhouse, Sporty, p. 113; Steiner, Jet Aviation, p. 25.]
An early issue called for selection of an engine. The big General Electric TF-39 was far from being the obvious choice. GE's management, believing that this engine would find a civilian market, expected to pitch it to the airlines after the Air Force had paid for its basic development. It quickly became apparent, however, that for the 747, the TF-39 was too noisy. While this problem was far from insuperable, it would demand a major rework, a significant civilian effort that would run parallel to the military's. GE took the view that the Air Force would receive priority. That did not suit Boeing, and the chance for a deal fell through.
GE's main competitor, Pratt & Whitney, had a different spirit. That firm had built a high-bypass turbofan of its own for the Air Force engine competition. While it had lost to GE's TF-39, Pratt's design won new life as an engine for the 747. The initial concept called for 41,000 pounds of thrust, matching the performance of the TF-39. Pratt called its engine the JT-9D. In turn, the selection of Pratt was propitious, for this contractor had a virtual monopoly (with a market share of some 90 percent) on jetliner engines that were already in production.. By contrast, GE's strength lay in military engines. [Newhouse, Sporty, pp. 117-120; Aviation Week, April 25, 1966, p. 41.]
At Boeing, Joe Sutter's engineers proceeded to prepare design concepts for Trippe's latest world-beater. Initial thinking, during 1965, held the view that the 747 might emerge as something resembling a big 707 with a double-deck cabin. Trippe, who had a strong interest in air freight, insisted, however, that the 747 was to permit easy conversion for use in cargo hauling. His requirement called for the plane to accommodate two side-by-side rows of containers of the type that were traveling by ship, rail, and truck. Their standard dimensions included width and height of eight feet. To fit them into a fuselage of circular cross section, then, would require a diameter of 21 feet. Here was the origin of the wide-body cabin, with its double aisles and ten-abreast seating. It would give a feeling of spaciousness that travelers would greatly appreciate.
From this basic decision came others. The 747 might sustain hard landings in which those containers would rip free of their moorings and hurtle forward with crushing force. Hence it would be a good idea to put the pilot and crew out of the way, with the flight deck high above the cargo deck. That would also offer the opportunity to install a big upward-swinging nose door for easy loading of freight, as on the C-5A.
For aerodynamic reasons, however, this flight deck could not simply sit atop the front fuselage like a camel's hump. It would have to be faired smoothly with the rest of the fuselage, sweeping gently to the back. This meant there would be a good deal of extra space to the rear of the cockpit. Sutter thought this would be a good place to put air-conditioning ducts. Trippe had other ideas.
Some 20 years earlier, Trippe had supported Boeing in another venture that had built a four-engine airliner called the Stratocruiser. It had featured a downstairs cocktail lounge that longtime travelers remembered with pleasure. He now took the view that a similar lounge in the 747, reached by a spiral stairway, would be just the thing. In subsequent versions of the 747, it would grow into a true passenger deck. But even in the earliest models, this lounge would offer a popular center of cheer. [Newhouse, Sporty, pp. 115, 116, 163; Steiner, Jet Aviation, p. 26; Bender and Altschul, Instrument, p. 504; Irving, Wide-Body, p. 204; Pedigree, p. 44; Kuter, Gamble, pp. 7-9, 19, 24; Aviation Week, November 20, 1967, pp. 60-61.]
Meanwhile, other Boeing officials were addressing the question of where to build their leviathan. The company's existing production facilities were busy building the 707, 727 and 737; hence Boeing would need new facilities for the 747. The search for a new plant site led to Everett, a lumber town 30 miles north of Seattle. The new factory, quite simply, would feature the largest enclosed space in the world, within a building spanning 40 acres. At Cape Canaveral, the Vehicle Assembly Building had held the previous record, with 130 million cubic feet under roof; the new Boeing plant would be 50 percent larger. The completed production center would span more than a square mile and would have a concrete apron with room for 20 of the big jets. [Serling, Legend, pp. 287-290; Pedigree, p. 62; Steiner, Jet Aviation, p. 26.]
Then in April 1966, Trippe formally ordered 23 passenger and two freight versions of the 747, for a total of $531 million. A decade earlier, his $269 million jetliner order had set a record for dollar value; this 1966 order now set a new record. Over the next three months, five other airlines signed on for 28 more 747s. With these orders, the die was cast. [Newhouse, Sporty, pp. 113-114, 120-121; Aviation Week, April 18, 1966, pp. 38-40.]
As the orders rolled in, however, managers at Boeing and Pan Am followed a course that soon had the weight of the 747 running badly out of hand. Initial design decisions had been relatively straightforward, with the planned weight being 655,000 pounds as of April 1966. Pratt & Whitney was prepared to accommodate such a design using its proposed engine, the JT-9D, and expected to increase its power according to a careful plan.
When it entered service in 1969, the engine was to produce 41,000 pounds of thrust. This thrust would increase to 44,000 in new versions planned for 1972. Pratt's designers would do this by pushing up the turbines' operating temperatures; in essence, this engine would deliver more power by running hotter. There are, however, a number of other ways to boost an engine's rated power. The view within Boeing, strongly encouraged by Pan Am, was that Pratt could deliver a 44,000 pound engine a lot sooner and enable the 747 to grow larger still.
Once this point of view took hold, Boeing's managers began acting like kids in a candy store. As early as April 1966, as Trippe was placing his order, Boeing was already anticipating that the plane's weight would run to 680,000 pounds. There were plenty of opportunities to go further. For a while, people talked of putting a swimming pool in the upstairs lounge. Though that notion fell by the wayside, the cocktail lounge by itself added more than two tons to the empty weight. More tons went in when Boeing lengthened the fuselage to accommodate extra seats. The additional passengers meant larger and heavier galleys for the food service, which in turn called for weightier structural bracing. The British airline BOAC declared that noise rules of the London Airport Authority would demand quieter engines. The 747's engine pods took on an additional half-ton of sound-absorbing linings.
Pratt & Whitney now had to play catch-up. Its basic engine would now be quite inadequate; it had to offer more thrust, and quickly. In October 1966, Pratt achieved a small rise in the turbine temperature, pushing the thrust to 42,000 pounds. This was pushing limits as well and would be all it could offer for a while.
In June 1967, Bruce Connelly, Boeing's vice-president of sales, sent a letter to Pan Am's chief technical managers. He stated that the 747's weight was on its way to 710,000 pounds. Even then, the 747 would be lighter than the C-5A. It was to fly considerably faster, however, which is why its engines needed more power. To Pan Am, the 747's weight meant a cut in the passenger capacity that would slice the profit on each flight by as much as $20,000. Alternately, the plane would fall short in range on a number of key overseas routes. Either way, this design would be unacceptable.
Boeing nevertheless hoped that Pan Am would accept such limitations on the grounds that better engines soon would restore the 747 to its full promise. Yet, in the words of Laurence Kuter who headed Trippe's technical staff,
Fortunately, Pratt had some power in reserve. By strengthening the engine's compressor and turbine, it could arrange for the engine to run at higher rotational speeds, processing more airflow and yielding more thrust. This would boost takeoff power to 43,500 pounds. Late in 1967, Pratt offered more. By providing water injection, that firm would boost the takeoff thrust to 45,000 pounds. Pratt promised to deliver such engines late in 1969.
Water injection was a specialty of the house at Pratt, dating to the piston-driven aircraft motors of World War II. Small quantities of water injected into an engine's airflow would evaporate within the engine, cooling the air and making it denser. This denser air then could burn more fuel, for extra power. This same principle had carried over to jet engines. Pratt had used water injection on the engines of the Boeing 707. Its additional thrust helped assure safe takeoffs. One senior Pan Am captain declared that he would rather lose an engine on takeoff than lose his water supply.
In 1967, however, Pratt, too, was overextending itself. It was promising a hotter, heavier engine of greater complexity: the plumbing and controls needed for water injection would not be simple. Yet this firm was holding to the same delivery schedule of a year and a half earlier, when the design of the JT-9D had been so much less demanding. It was these engines that would determine whether Boeing could build complete airplanes rather than gliders, and whether Pan Am and other airlines could put the 747 into service. [Solberg, Conquest, pp. 396-397; Irving, Wide-Body, p. 306; Kuter, Gamble, pp. 62, 72-73; Bee-Hive (Pratt & Whitney), January 1947, p. 3; Aviation Week, November 20, 1967, pp. 79-85.]
In pursuing this program, Boeing faced difficulties that went beyond the sheer size of the aircraft and the need for its vast new Everett facility. The 747 set new marks in complexity. For instance, it was so large that not one of its control surfaces, such as ailerons or rudder, could be deflected through the use of a pilot's muscles. The demands of safety then required four independent hydraulic systems. Earlier jetliners, such as the 727, had gotten along with only two. The demands on suppliers also were correspondingly greater than on the earlier programs. In turn, the task of assembling wings and tail surfaces was that much more complex. [Newhouse, Sporty, p. 102; Eddy et al., Disaster, pp. 30, 98.]
At the outset, Boeing's senior management had been well aware that the 747 would soak up money for several years before it could begin to generate revenue by delivering complete aircraft. The up-front expenses would include building and equipping the Everett factory, paying wages and benefits for its workforce, and assembling the first flyable 747 aircraft. Yet even then the company would not be ready to deliver them to customers such as Pan Am. Those initial production aircraft would first undergo extensive flight tests that would win a federal Certificate of Airworthiness for the 747. During these tests, Boeing would have to continue paying salaries as well as interest on borrowed money. This process of certification represented a legal requirement that the 747 would have to meet before it could see use in scheduled service. Only after completion of this process would Boeing be free to deliver those airliners and receive payment.
Hence, during 1966, the company laid financial groundwork by assembling a billion-dollar kitty. It raised $420 million through sale of notes, convertible debentures, and stock. Boeing's bankers helped as well, with a $400 million line of credit. The firm owned a subsidiary that was building gas turbines; the president, William Allen, ordered it sold. Airlines, placing orders for the 747, also contributed. They had usually paid no more than one-fourth of the purchase price prior to delivery. For the 747, however, they would pay half. Pan Am, for one, would pay as much as $275 million in advance. Then in 1967, company underwriters converted recently-issued debentures into new stock, thus placing Boeing in a position to sell still more securities. [Newhouse, Sporty, pp. 120-121; Business Week, December 24, 1966, p. 44; Aviation Week, November 20, 1967, p. 59.]
As work began at Everett, however, the 747's assemblers proved not necessarily to be the highly skilled production workers upon whom Boeing had long relied. The mid-1960s had brought a boom and had taken available aircraft assemblers for existing programs, leaving relatively few for the 747. During 1967, amid the buildup for this newest effort, Boeing hired 37,000 employees and let 25,000 go. The company was resting its prospects on its most inexperienced workers.
Then the engine problems hit home. Coming to the fore following the rollout of the first 747 in September 1968, these problems dogged the program as it proceeded through initial production and flight test. No one ever expected that the rollout would lead in mere weeks to commercial service, for Boeing had planned from the outset to use the entire year of 1969 in testing five such aircraft. Still, in the words of John Newhouse of the New Yorker:
The flight tests disclosed a new engine problem known as "ovalization," which cropped up only after hundreds of hours in the air. It resulted from wear in the compressor assemblies that distorted the circular cross sections of elements of the compressor into an oval shape, with loss of power and considerable increase in fuel consumption. This resulted from the engines' high thrust, which reacted against their supports and bent the engine casings. Though cure emerged in the form of a steel yoke that would stiffen the case, it took time to apply. [Newhouse, Sporty, p. 164; AIAA Paper 2987 (1991), p. 8.]
Meanwhile, new orders were drying up. During 1967, 1968, and 1969, the total value of airliners on order from Boeing, of all types, fell from $3.2 billion to $1.1 billion. This did not reflect a falloff in passenger demand, for airline traffic was zooming. The carriers, however, had anticipated this demand and had provided for it with their earlier purchases. Then, in 1970, as a nationwide recession blew in, passenger traffic went flat. It would not rise again until 1972. Airlines responded by cutting new orders close to zero. Boeing's John Steiner notes that "at the bottom, we did not sell a single commercial airplane to a U.S. trunk carrier for a period of seventeen months."
The 747 took its lumps as well. Airline executives, sensing an opportunity, moved to sweeten their terms of purchase. Instead of paying 50 percent of the purchase price prior to delivery, they dropped the amount to 30 percent. It did not help; in the year and a half after September 1970, Boeing sold only two 747s in the world, and went nearly three years without a single sale to a domestic carrier. Total orders were barely 200, too few to cover the program's costs.
Even when the Everett facility rolled out production 747s, they were not always in condition for service. In March 1970, two dozen of these craft were parked outside the factory waiting for their engines. Together with other 747s in final preparation, Everett had a total of $800 million worth of aircraft on hand. Boeing could not receive the airlines' checks, for payments due on delivery, until these planes were actually ready for commercial use.
These cash-flow problems brought dreadful consequences for the company's debt. Following conservative accounting practices, Boeing had maintained the trust of its bankers. This helped as the firm's debt, owed to a syndicate of banks, topped the billion-dollar mark. In 1970, however, William Allen and Hal Haynes, his chief financial officer, tried for a further increase in their credit line and met defeat.
To win further leeway, Boeing had few choices. Its executives could not seek a merger, for the firm was heavily burdened with debt; who would want to buy it? Nor could the company raise capital by issuing new stock; its shares on Wall Street were in a slump. Because it was indebted beyond the value of its net worth, there was no equity on which to base an offering of new bonds or debentures.
Bankruptcy loomed. "We have never revealed how close we got to the edge," wrote Steiner. In speaking of the 747, William Allen noted that "the magnitude of the risk and the capital required were sufficiently great that, at best, we knew that it would strain the Boeing Company. It was really too large a project for us." Though he had hoped to keep his debt below the billion-dollar mark, the actual amount topped $2 billion. Much of the difference lay in nearly-complete but undelivered aircraft that sat outside the Everett plant, waiting for their engines. At the worst, Boeing's syndicated debt, owed to its banks, reached $1.2 billion. This set a record, not only within the aviation industry, but for all corporate borrowing. [Steiner, Problems, pp. 1, 15; Serling, Legend, p. 333; Newhouse, Sporty, pp. 168-169; Forbes, July 1, 1970, pp. 33-34; Business Week: March 28, 1970, pp. 124-128; April 1, 1972, pp. 42-44; author interview, John Steiner, Bellevue, Washington, April 13, 1991.]
The company could do little more than to fall back on its own resources, instituting sweeping reorganizations aimed at boosting efficiency. Massive layoffs paced these changes. The Commercial Airplane Group was by far the largest part of Boeing, and its employment peaked at 83,700 during 1968. Layoffs proceeded at a modest pace during 1969 but stepped up abruptly during 1970. The number of employees fell below 30,000 by year's end, dropping toward a nadir of 20,750 late in 1971. This was part of an industrywide trend, for from December 1970 to June 1972, employment in the commercial airplane industry fell by nearly one-third.
During one week alone, some five thousand of Boeing's people received pink slips. Firings reached to the top of major organizations; even vice-presidents got the axe. People took to saying that an optimist was someone who brought a lunch to work; a pessimist kept his auto engine running while he went inside.
In the Seattle area, the consequences were devastating. Each unemployed Boeing worker cost the job of at least one other person, due to the loss of the worker's purchases and spending. The resulting multiplier effect sent unemployment to 14 percent, the highest in the nation, according to the Department of Labor. About the same number of people were on welfare or receiving food stamps. Enrollment in a free-lunch program for schoolchildren soared more than fiftyfold.
A brand-new car went on sale at half price-and drew no takers. A former Boeing employee had to back out of a deal to buy a house with a federal low-interest loan, for nothing down. Apartment managers offered a month's free rent along with a free stereo. Nevertheless, vacancy rates reached 40 percent in some suburbs and topped 16 percent within the area, up from one percent during the boom of 1967. Night after night, near the main airport, fewer than half the available motel rooms were full. The operator of one motel, the Sky Harbor, declared that he would "rent any room for any price right now."
Auto sales dropped by as much as 50 percent, and more than a dozen dealerships went under. Seattle's sister city, Kobe in Japan, sent food parcels and relief funds. As people fled the area in droves, the demand for U-Haul trailers grew so large that local agencies ran out of equipment to lease. Two real-estate men put up a billboard near the airport, showing a light bulb hanging on a wire and captioned:
Will the last person
As lights dimmed across the city, another Boeing project, the Supersonic Transport (SST), was flying toward its own day of decision. [Steiner, Problems, p. 2; Serling, Legend, pp. 334-337; Astronautics & Aeronautics, February 1972, pp. 27, 32; Aviation Week: June 29, 1970, pp. 14-17; July 6, 1970, pp. 44-46; Time: January 4, 1971, pp. 28-29; April 5, 1971, pp. 76-82; Newsweek: August 17, 1970, pp. 56-57; August 28, 1972, pp. 72-73.]
The SST took shape as a response to a joint Anglo-French venture, the Concorde. Like the 747, the push for supersonic commercial flight demanded heavy dollops of advanced technology. While the 747 developed into an exercise in corporate management and finance, the Concorde and SST programs were marked by politics. The politics featured international agreements, competing centers of influence in Washington, congressional hearings, and the rise of environmentalism as a major popular movement.
The Concorde grew out of a strong base of experience, in both Great Britain and France, in commercial aviation as well as supersonic flight. Britain's Sir Frank Whittle had invented the jet engine; the Yankees had for a time been little more than apt pupils of the British, with General Electric building British-designed engines under license. Sir Geoffrey de Havilland, a leading planebuilder, then had parlayed this engine technology into the Comet, the world's first commercial jetliner. Though it aimed at the transatlantic market, it proved uneconomical and failed to compete with the 707 and DC-8. It did, however, demonstrate a clear penchant for pioneering.
The French followed with the Caravelle, a small short-range jetliner built by Sud Aviation in Toulouse. Significantly, its engines also were British: Avon turbojets from Rolls Royce, with 12,600 pounds of thrust. In this fashion, the Caravelle set a precedent for future Anglo-French cooperation. It sold well in Europe, and won sales in America as well. United Airlines bought 20 of them, putting the first ones in service in mid-1961. For France, this was a breakthrough; never before had a French manufacturer sold aircraft to a U.S. airline. [Eight Decades, pp. 30, 42-55; Davies, History, pp. 451-455, 487-489; Wilson, Fiasco, p. 16.]
Another French planebuilder, Marcel Dassault, spent the 1950s leading his country into supersonic flight. The company he headed, Avions Dassault, built the Mystere IV-B, the first European plane to break the sound barrier in level flight. It accomplished this feat in February 1954, only nine months after an American fighter, the F-100, did the same. Then, in October 1958, another Dassault aircraft, a Mirage III-A, became the first European aircraft to fly at Mach 2.
The British were also making sonic booms. The firm of Fairey built an experimental jet, the Delta FD-2. In March 1956, it set a world speed record at Mach 1.71, or 1132 mph. Another company, Bristol Siddeley, developed a highly capable engine called the Olympus; an upgraded version would power the Concorde. In addition, the Royal Aircraft Establishment at Farnborough was a world-class center of aeronautical research. [Gunston, Fighters, pp. 38, 46, 171; Wilson, Fiasco, p. 17; Burnet, Concorde, pp. 19, 151; Costello and Hughes, Concorde, p. 43.]
Two planebuilding firms, Sud Aviation and British Aircraft, carried through the design studies that led to the Concorde. For the engine, Bristol Siddeley cooperated with SNECMA, a French firm that had built engines for the Mirage fighters of Dassault. As design concepts took shape, leaders in both countries cherished the hope that they might leap past the era of subsonic jets, in which America had taken a strong lead, and take the initiative in a new realm of supersonic flight.
France, led by the strongly nationalistic Charles de Gaulle, had reasons of its own to proceed. De Gaulle had vowed to challenge what he called "America's colonization of the skies," and won strong support from his nation. There was widespread resentment of American corporations that were dominating a host of European markets, including commercial aviation. This resentment was quite similar to what Americans themselves would feel, two decades later, as Japan took over increasing shares of the automobile and electronics industries.
The joint commitment to Concorde took the form of an intergovernmental agreement in November 1962, with the force of a treaty. Each nation agreed to carry half the cost. In turn, the four participating companies-Sud, British Aircraft, Bristol Siddeley, SNECMA — would all work as contractors to their respective governments. [Dwiggins, SST, pp. 197-198, 201-202; Newhouse, Sporty, pp. 193-194; Wilson, Fiasco, pp. 24-32; Knight, Concorde, pp. 21-31; Costello and Hughes, Concorde, pp. 39-52; Owen, Concorde, pp. 44-58, 262-262; Aviation Week: September 17, 1962, pp. 34-36; December 3, 1962, p. 41.]
This challenge was too serious for President Kennedy to ignore. America's planebuilders had nothing like Concorde in the offing. Moreover, there was never any prospect that an American SST would go forward as a purely commercial venture, with corporations raising the needed funds through bank loans and sales of securities. The costs of an SST would be too great, as were the technical uncertainties. In addition to this, airline executives, busily purchasing the current generation of jets, were far from thrilled at the thought of being stampeded into a supersonic era. Within the Kennedy Administration, however, the SST found a persuasive champion in Najeeb Halaby, the head of the Federal Aviation Agency. [The FAA changed its name to Federal Aviation Administration in 1967, upon formation of the Department of Transportation. Kent, Safe; see index references.]
Halaby started in early 1961 by winning a congressional appropriation of $11 million with which he launched feasibility studies. Late in 1962, with the study results in hand and the Concorde under way, he urged JFK to initiate a major SST program in response. Though Kennedy was not quite ready just then, he responded by commissioning an interagency review headed by Vice President Lyndon Johnson (LBJ), a strong SST supporter. While this review proceeded, Juan Trippe proceeded to stir the pot.
During the spring of 1963, Trippe let it be known that he intended to place a "protective order" for six Concordes. He, however, would much prefer to purchase American SSTs, should they become available. In June, he announced that he was taking options on the European airliner, putting down money to reserve positions on the production schedule, though he was not actually committing to make the purchases. By then, Kennedy had the favorable results of the interagency review. On the day after Trippe's announcement, he also made a favorable statement of his own. Addressing the graduating cadets of the Air Force Academy, he declared:
In his formal message to Congress, sent in mid-June, he emphasized that the government would put up no more than $750 million, while the manufacturers would carry at least 25 percent of the development costs.
Halaby got the program off to a running start in August, as the FAA issued a formal Request for Proposal to interested companies. As they prepared their proposals, however, executives of major planebuilders also came forward with complaints. They objected strongly to the cost-sharing arrangements, under which they were to put up 25 percent of the program expense. This was their way of declaring that the SST looked like a fine way to lose money. Nevertheless, they would do their duty as patriots if Uncle Sam would carry more of the financial load. Boeing's William Allen was particularly blunt: "Government must be prepared to render greater financial assistance than presently proposed."
Kennedy responded by commissioning an outside review of the issue, putting it in the hands of Eugene Black, former president of the World Bank, and Stanley Osborne, chairman of Olin Mathieson. He asked them not only to review the cost-sharing issue but also to cast a broad net by talking as well to government officials. Their report reached the White House a week before Christmas, with Lyndon B. Johnson now holding the presidency following the death of Kennedy.
The report's conclusions were devastating to Halaby. It rejected his view that the SST should go forward as a race with Concorde. Instead, the effort was to focus initially on building a test aircraft to serve for research. The report went so far as to recommend that the program should be taken out of Halaby's hands altogether, for the FAA had no staff ready to manage such a task. On the cost-sharing issue, it recommended that the government should pick up 90 as opposed to 75 percent.
These conclusions generally suited the preferences of another player: Robert McNamara. He had faced down the Air Force in dealing with a technically similar program, the North American B-70, that sought to build supersonic bombers with the size and speed of an SST. Though Air Force generals had called for its rapid development and production, McNamara endorsed an Eisenhower Administration decision to build only three prototype craft, XB-70s, for use in flight test. McNamara also had developed an interest in the SST itself, and had served as a member of Vice-President Johnson's interagency review panel.
The Black-Osborne report set in motion a Washington debate that eased Halaby toward the margins of SST management and made McNamara a central figure. In April 1964, Lyndon B Johnson picked him to head a presidential advisory committee on the SST. Though the program remained within the FAA, high-level decisions went into the hands of this advisory panel. As defense secretary, McNamara had insisted that new military programs were to receive extensive study and analysis before their managers could cut metal for prototypes. He now approached the SST from the same perspective, arguing that the FAA should commit to building a prototype only after suitably refined designs were in hand and only after serious economic analyses showed a reasonable prospect for success. [Pace, XB-70, pp. 15-19; Horwitch, Wings, pp. 64-73; Dwiggins, SST, pp. 12, 15-16, 108-111, 128-133, 138-143, 147, 149-152; Fortune, February 1964, pp. 118-122, 168-172.]
It would take nearly three years, till the end of 1966, before SST studies would reach this level of depth. An initial issue for research involved public response to sonic booms. These are different from ordinary loud noises, as from a jackhammer. A sonic boom arises from an airplane's shock wave, which spreads behind the aircraft like the bow wave of a ship. The shock produces a moving wall of compressed air that trails along the ground, sweeping out a swath up to 50 miles wide and the full length of the supersonic flightpath. Within this swath, every person feels the boom when the shock passes. The pressure rise is not large, rarely more than a thousandth of atmospheric pressure. It is, however, both sharp and sudden; hence it can startle people and crack plaster. The strength of a sonic boom is measured as an overpressure; designers expected that an SST would produce values of around two pounds per square foot during cruise. By contrast, loud noises have their intensity measured in decibels, a completely different unit. Hence the FAA wanted to know how boomy an SST could be and still produce no more annoyance than conventional subsonic jets.
An initial exercise, Operation Bongo, took place around Oklahoma City during 1964. It was a joint FAA-Air Force experiment that sought to determine whether people could learn to accept sonic booms as just another type of noise, akin to that of railroad trains or trucks on a highway. For six months the Air Force sent supersonic F-104 fighters over the city, day after day and at specified times. Observers found reason to believe that there might indeed not be much of a problem, for a number of people put the booms to their advantage.
A secretary used the recurring booms as an alarm clock. She got out of bed at the window-rattling crack of the seven a.m. boom, then took a shower. She shut off the water when she heard the next boom, for this meant it was 7:20, time to start her day. Other people also treated the eight daily booms as if they were blasts from a factory whistle. One group of construction workers used the eleven a.m. boom as their signal for a coffee break. Animals as well went undisturbed. In El Reno, a nearby town, a farmer saw a tom turkey chasing a hen. Though a boom rattled the barn, the tom never broke stride.
In several respects, these tests were biased toward minimizing citizen complaints. Oklahoma City was strongly aviation-minded, with a major FAA center and an Air Force base. The booms came by day, never at night, and people knew when to expect them. They also knew that the test would run for only a few months. The booms themselves were weaker than those of an SST and carried less energy, though they did increase in strength over the months.
Nevertheless, the results were enough to give pause, as some 4900 people filed claims for damages. Though most involved little more than cracked plaster, one man did receive a payment of $10,000. Two high-rise office towers sustained a total of 147 cracked windows. During the first three months of the tests, polls indicated that 90 percent of the people felt they could live with the booms. After six months, this number was down to 73 percent. This meant that some one-fourth of these citizens believed they could not live with them and would regard them as unacceptable.
This was bad news at the FAA in Washington. The news soon grew worse, as a second series of tests, at Edwards Air Force Base, introduced the use of larger supersonic aircraft. These included the XB-70, the only plane in the world with the size and speed of an SST. The workhorse of the new studies, the B-58 bomber, was only slightly smaller. Already it had shown its uses in sonic-boom tests, flying from Los Angeles to New York in two hours. Unfortunately, it had shattered windows as well as speed records, showering offices and living rooms alike with broken glass. Police switchboards from coast to coast had lit up with calls as frightened people reported they had heard a terrible explosion. [Fortune, February 1967, p. 117; Shurcliff, S/S/T, pp. 3-5, 21-38; Dwiggins, SST, pp. 57-62, 69-73, 77-78, 80.]
The tests at Edwards took place during 1966, and Karl Kryter, a sonic-boom specialist at Stanford Research Institute, summarized the findings in the journal Science: When both European and American SSTs were fully operational, late in the 1970s,
The historian Mel Horwitch would note that when these results reached an SST coordinating committee, "an almost instant consensus developed that the American SST could never fly overland."
This did not rule out going ahead with the program. Boeing and the FAA estimated that even if the SST was restricted to overwater flights, it could still sell 500 airplanes. That would suffice to ensure commercial success. With no restrictions, Boeing's managers believed they could sell as many as twelve hundred. Business Week noted that "at $40 million per SST, a ban would mean a sales penalty of $28 billion — greater than Boeing's total sales for the last fifteen years."
Similar warnings came from Senator William Proxmire, an eventual opponent of the Space Shuttle who was already taking the lead as a strong opponent of the SST: "The SST will start by flying the ocean routes. Soon the economic pressures of flying these high-cost planes on limited routes will force admission of the planes to a few scattered land routes. And ultimately they will be flying everywhere." [Horwitch, Wings, p. 148; Science, 24 January 1969, p. 359; Business Week, October 28, 1967, pp. 64-68.]
Also during 1966, design studies and analyses reached a level that allowed the FAA to select contractors through a design competition. Boeing won, with a proposal that called for engines from General Electric. This contract award came through on the last day of that year; a four-year program now lay ahead, aimed at building two prototype aircraft. This selection of contractors was crucial. The program now was in a new phase, no longer one of endless study but rather of mainstream airliner development.
This shift in status brought a quick response from SST critics, as the beginnings of organized opposition took form. The man who did the organizing was William Shurcliff, a physics professor at Harvard. Early in 1967, he set up the Citizens League Against the Sonic Boom. His son and sister were founding members; its office was in his home. He did not set out to arrange protest demonstrations. Instead, he proceeded to run a clearinghouse for critics, taking out newspaper ads, writing letters, raising questions, and generally working to argue that the emperor had no clothes. His organization was never large, its peak membership running to only a few thousand. The rudder of a ship is also quite small. Like that rudder, Shurcliff would prove to be highly influential in steering the SST to its fate.
Shurcliff's activities unfolded within a burgeoning environmental movement that was about to rise to a height of influence. This movement drew strength from a surge in public outrage against air and water pollution. As early as 1965, the Opinion Research Corp., a polling organization, found that up to one-third of the American people viewed such issues as serious. Here was a level of concern that no political leader could ignore. By 1970, nearly three-fourths of the public shared this attitude, representing a power capable of sweeping everything before it.
Matching this rise was a dramatic increase in the prominence and clout of leading environmental organizations. In 1967, the Sierra Club, then with only 55,000 members, was already one of the largest and most active of these groups. Though its emphasis was on protecting wilderness areas, its focus at the time was on a regional issue, fighting the construction of Marble Canyon Dam on the Colorado River. To win political support, it had to bend to the needs of such powerful senators as Henry Jackson, chairman of the Senate Interior Committee and a strong SST supporter. By 1971, its membership was at 200,000 and rising, and its leaders were taking pivotal roles in the fight against the SST.
The rapid growth in environmental concern during the late 1960s recalls the widening power of the civil rights movement. A turning point for that movement had come in Birmingham, Alabama in May 1963, when the nation watched as that city's commissioner turned police dogs and fire hoses against protesting black citizens. For the nation's environmentalists, a similar moment came early in 1969 in Santa Barbara, California.
The Santa Barbara Channel is rich in offshore oil; a line of drilling platforms stands six miles out to sea. Early that February, an oil-well blowout sent vast flows of crude into the water, where it quickly drifted onto the beaches. The Santa Barbara beaches, as highly prized as those of Malibu, now turned from shining white to gummy black. The very waves of the ocean lay unformed as they drowned beneath the thick suffocating scum. Its stink blew into the canyons, a mile and more inland. It took live steam to remove this ugly mess from the hulls of boats, and the toll of birds and sea life was immense. The historian William Manchester would write that "pelicans drove straight into the oil and then sank, unable to raise their matted wings, and the beaches were studded with dead sandpipers, cormorants, gulls, grebes, and loons, their eyes horribly swollen and their viscera burned by petroleum." [Wattenberg, America, pp. 226-227; Manchester, Glory, pp. 1173-1174; Horwitch, Wings, pp. 221-224, 233-239, 310; Fortune, February 1967, pp. 113-116, 227-228.]
Shurcliff had been proceeding with his anti-SST activism. In July 1969, he received valuable support as David Brower, who had been executive director of the Sierra Club, founded Friends of the Earth. It took a strong stand against the SST. The following March, a wealthy Baltimore man, Kenneth Greif, took the lead in organizing a nationwide coalition of SST opponents. The Sierra Club now signed on. So did the National Wildlife Federation, the Wilderness Society, and the Consumer Federation of America. In this coalition, opponents now had an instrument suited for work in the political arena.
A nucleus of anti-SST sentiment already lay at hand within the Senate, where William Proxmire regarded its economics as most curious. The plan called for the FAA to put up $1.3 billion to carry the program through the construction and test of two prototypes. The SST then would go into production, and Boeing would pay the government a royalty on each plane sold. The federal outlay thus was "not a subsidy, it's a loan," said William Magruder, a Lockheed man who had taken over as SST program manager. "By the time the 300th airplane is sold, all of the Government's investment will be returned to the U.S. Treasury, and when we sell five hundred airplanes, there will be a billion dollars in profit to the Government."
Proxmire responded by arguing that Uncle Sam was not a venture capitalist. If this "loan" was so profitable, then Boeing should tap into its banks instead, as it had done in financing the 747. Referring to Nixon's SST budget request for fiscal 1971, Proxmire added,
His colleague Gaylord Nelson, another Senate opponent, described the SST as
The immediate focus of attention was a congressional hearing held in May 1970, with Proxmire as chairman. He chose the witnesses with care. Among them was Richard Garwin, a senior physicist at IBM who had participated in a White House review of the program. Calling for an immediate end to its federal support, Garwin asserted that "the SST will produce as much noise as the simultaneous takeoff of fifty jumbo jets." He drew concurrence from Russell Train, a member of Nixon's Council on Environmental Quality, who described such noise as the SST's "most significant unresolved environmental problem."
Train also opened a new attack by introducing the issue of whether a fleet of SSTs might damage the ozone layer in the upper atmosphere. The air at its cruising altitude, some 65,000 feet, is very dry and low in humidity. It also is rich in ozone, which forms a layer that protects the earth from the sun's dangerous ultraviolet rays. The atmospheric scientist Conway Leovy, writing in the Journal of Geophysical Research, had set forth a "wet photolysis" theory whereby water vapor in the stratosphere could speed the destruction of ozone.
Train stated in his testimony that the SST would discharge "large quantities of water vapor, carbon dioxide, nitrogen oxides and particulate matter." He added that "500 American SSTs and Concordes flying in this region of the atmosphere could, over a period of years, increase the water content by as much as 50 to 100 percent." This water vapor, formed copiously from the burning of jet fuel, could destroy some of the ozone, putting the world at greater risk from the ultraviolet. Proxmire welcomed Train's statement as a "blockbuster."
The turn of the tide quickly became evident. During the previous autumn, SST funding had passed by large margins in both the House and Senate. On May 27, however, voting on the 1971 budget, the House passed the bill by only 13 votes, 176 to 163. Opponents took new heart, for they understood that with the margin of victory having narrowed so dramatically, the SST might quickly fall during the next round of congressional action.
During the summer of 1970, critics sprouted anew. In July, the Airport Operators Council, representing all major airports, stated that the SST should receive funding only if it could meet stringent noise standards. In August, a group at MIT, conducting the Study of Critical Environmental Problems, gave further support to concerns about the upper atmosphere. It stated that a fleet of SSTs could produce effects similar to those of the 1963 eruption of the volcano Mt. Agung, which had increased stratospheric temperatures by as much as 12 degrees. In September, the prestigious Federation of American Scientists came out against the SST. So did the mayor of New York, John Lindsay, who was widely viewed as the Republicans' answer to the Kennedys.
Also in September, Kenneth Greif's coalition orchestrated a devastating attack on the SST's economic prospects. Over a dozen prominent economists signed individual statements stating their criticisms. The group included Paul Samuelson, Milton Friedman, Kenneth Arrow, John Kenneth Galbraith, Wassily Leontief, Walter Heller, and Arthur Okun, who had chaired the White House's Council of Economic Advisors. The group thus spanned the political spectrum from Friedman on the right to Galbraith on the left. Only one leading economist, Henry Wallich, came out in favor of the SST.
Senate leaders put off their vote until after the November election, a move that SST supporters hoped would allow some senators to vote with less fear of public pressure. Instead, the delay gave opponents more time to organize. Leading supporters included the senators from Washington state, Warren Magnuson and Henry Jackson. On November 30, sensing defeat, they introduced a last-minute bill to ban overland flights that would produce sonic booms. It was too late; such bills had been in the congressional hopper since 1963, and the fact that this one passed unanimously was not important. After all, it would have to pass the House as well, where it quickly died. Early in December, the Senate voted to kill funding for the SST, 52 to 41.
This was not the end of the matter. The House, after all, had passed the bill in May, albeit narrowly. Now a conference committee recommended a compromise: to continue the SST program, but with reduced funding. The issue was not settled; it now would take the form of whether Congress would accept or reject this new arrangement. The vote would not take place for three months.
Again, though, time worked for the opponents. In January 1971, the citizens' group Common Cause, which was growing in influence, announced its opposition. So did Charles Lindbergh, the man who had flown to Paris in 1927. Still active after all those years, he had long held a seat on Pan Am's board of directors, and had become an ardent environmentalist. [Kent, Safe, pp. 302-306; Horwitch, Wings, pp. 282-289, 303-311; Dwiggins, SST, pp. 68-69, 81; Bender and Altschul, Instrument, p. 501; Newsweek, December 14, 1970, p. 83; Aviation Week, December 14, 1970, p. 18; Science, 24 July 1970, pp. 352-355; Time, December 14, 1970, pp. 13-14; Journal of Geophysical Research, January 15, 1969, pp. 417-426.]
Another round of hearings would precede the votes, and again the opponents had new ammunition. James McDonald of the University of Arizona, a member of a National Academy of Sciences panel on climate modification, asserted that 500 SSTs could deplete enough ozone to produce 10,000 cases per year of skin cancer within the U.S. This would result from the increased power of the solar ultraviolet. His statement caused a sensation.
McDonald had based his conclusions on the threat to ozone from water vapor. Ironically, this wet-photolysis theory was overturned within months, as new research in atmospheric science showed that the effects of water vapor on ozone were all but nil. Another scientist, Harold Johnston of the University of California at Berkeley, rode to the rescue by asserting that nitrogen oxides would also damage the ozone layer. SST engines would produce such oxides in large quantities. Johnston calculated that 500 SSTs would destroy up to half the ozone in the air over the United States. [Horwitch, Wings, pp. 319, 327; Astronautics & Aeronautics, December 1972, pp. 56-64; Science, 6 August 1971, pp. 517-522; Journal of Planetary and Space Science, April 1971, pp. 413-415.]
Not all the arguments were on Proxmire's side. During 1970, the pro-SST forces had consisted largely of the usual corporate interests. By early 1971, however, these forces were stiffening their strength. A key argument involved jobs: With the Concorde as an SST in being, an American riposte was essential. That argument had failed to win more than divided support among union leaders, but now George Meany, head of organized labor's powerful AFL-CIO federation, came out in favor of the SST. Nixon Administration officials also weighed in with endorsements. Even William Ruckelshaus, director of the new Environmental Protection Agency, argued in favor of building at least the two prototypes.
Acoustics expert Leo Beranek, chief scientist of the firm of Bolt, Beranek, and Newman, concluded that production SSTs could be quiet enough to meet FAA noise restrictions. There also was countering testimony on the atmosphere, as William Kellogg, associate director of the National Center for Atmospheric Research, stated that effects due to SSTs would be imperceptible amid those due to natural causes.
Yet, by 1971, the issue was well past being one of whether design refinements might address specific objections or whether new research might lay scientists' concerns to rest. The public was simply against the SST, by over 85 percent in opinion polls. In 1971, barely half of all Americans had ever flown in any kind of airplane; supersonic flight to Europe was as far beyond most expectations as a visit to Shangri-La. The Los Angeles Times cartoonist, Paul Conrad, caught this spirit neatly by showing an SST's four engines as garbage cans spewing refuse that included a dead cat.
Even so, the final vote was close. As recently as December 1970, the House had maintained its narrow margin of support. Now, however, Congressman Sidney Yates, a key SST opponent, took the floor and said, "I demand tellers with clerks." This set in motion a new procedure, in use only since the beginning of the year, whereby the votes would be recorded. Unable to vote in secrecy, as it had done before, the House turned thumbs down on the SST, 215 to 204. The Senate repeated its earlier no vote, and it was all over. [Horwitch, Wings, pp. 314-327; Time: March 22, 1971, p. 15; March 29, 1971, pp. 13-14; April 5, 1971, pp. 11-12, 77; Newsweek: March 8, 1971, pp. 81-82; March 29, 1971, pp. 23-24; April 5, 1971, pp. 19-21.]
These votes eliminated further federal funding for the SST. They did not ban the construction of SSTs using private-sector funding; Boeing was perfectly free to proceed with the program, if it could win the necessary support through banks or sale of securities. The company, however, was already mortgaged to the hilt; its financial leeway was close to zero. When the SST died on Capitol Hill, it died for good.
This congressional action had important consequences. It marked an end to the policy of having the FAA take on a new role by underwriting the development of new jetliners. The funding of such projects now returned to the private sector. The FAA returned to its permanent responsibilities, which included air traffic control and certification of airliners and their equipment.
The demise of the SST also brought an end to a half-century of continuing advance in the performance of commercial airliners. The industry would continue to come forth with new designs, but these would be conventional in form. The nation's airlines would find their future below the speed of sound and at altitudes well under the ozone layer.
In the struggle over the SST, the environmental movement came of age and took its place as a major and powerful political force. In defeating the SST, the nation's environmentalists showed that they had the clout to block such a program even when it held support from the AFL-CIO, the Administration, and the aerospace industry with its well-funded lobby.
With its votes against the SST, the House and Senate showed that they would cancel an important aerospace program even in the face of an industry-wide recession, and with the national economy as a whole in a slump. This raised the question of whether Congress as a whole would continue to oppose the interests of this industry. This question would not take long in receiving an answer, for in the immediate wake of the SST controversy, Congress faced a debate over another project: the Lockheed L-1011 airliner.
The new high-bypass turbofan engines, which launched the Boeing 747, also launched a parallel effort that proved less ambitious but better-suited to the workaday needs of the nation's domestic carriers. At American Airlines, the vice-president of engineering, Frank Kolk, was responsible for determining what type of equipment his airline would need and for working with the manufacturers to get it. When Juan Trippe ordered his 747s, in April 1966, Kolk saw that this aircraft was far too large for his market. He quickly took the initiative in recommending the development of another new airliner, one that would offer wide-body comfort along with the economy of the new turbofans. His plane, however, would be intermediate in size between the earlier jets and the 747.
Kolk's initial concept was well suited to American's route structure, which featured large numbers of flights between New York and Chicago. Indeed, it was a little too well suited; it lacked the size and performance that other airlines demanded. Kolk held discussions with his counterparts at Eastern, TWA, United, and Delta, and together they agreed that the new airliner was to have three engines and a larger passenger capacity. These four carriers along with American would be the initial customers, and Kolk and his colleagues proceeded to develop a common set of requirements.
Two planebuilders, Lockheed and McDonnell Douglas, proceeded to craft designs. This, however, was no federal competition for a contract, wherein one would win and the other would lose; this was an exercise in free-market competition, in which both firms had the opportunity to vie for success. The designs that emerged, the DC-10 and L-1011, were highly similar in size, performance, and general appearance, reflecting their compliance with Kolk's specifications.
During 1966, Lockheed was matched with Boeing in a federal competition that was the mirror image of the one in 1965. That earlier bidding war had involved the C-5A; when Boeing lost, its management immediately moved to pursue the 747. In 1966, the focus of attention was the SST, with these same firms competing for the FAA contract, and this time it was Boeing's turn to win. Lockheed's president, Daniel Haughton, learned the news on the last day of the year. Like his counterparts at Boeing, he immediately ordered that the people who were working on the SST shift gears and turn their attention to Kolk's airliner.
In aerospace design, small details can have large consequences, and this would be true of the L-1011. This airliner was to install one of its engines at the rear end of the fuselage, receiving its air through a curving duct that ran beneath the vertical fin. At the outset, Lockheed's engineers knew that they needed a short engine to fit this installation. Neither General Electric nor Pratt & Whitney had what they wanted, but a third player was at hand: Britain's Rolls-Royce. That company had a design on paper for a new engine, the RB-211, along with a very aggressive head of its Aero Engine Department, David Huddie. Above all, he wanted to place his company's engines within America's new generation of wide-body jetliners. Rolls had never cracked the domestic market in America, the world's most lucrative, but Huddie saw his opportunity in the L-1011. He succeeded, and in return he later received knighthood from the Queen. [Newhouse, Sporty, pp. 122-123, 141-155; Astronautics & Aeronautics, October 1968, pp. 64-69; Fortune: May 1968, pp. 61-62; June 1, 1968, pp. 80-85, 151-154; March 1969, pp. 123-128, 136-140.]
By 1971, however, Lockheed's Dan Haughton was finding that he had hatched some chickens that now were coming home to roost. This had happened during 1965, when he had presided over his company's bid for the C-5A. The company had needed the work quite badly; if it had lost the contract, it would have had to shut down a division in Georgia, a major operating arm. To guard against this, Haughton had "bought in," submitting an unrealistically low bid of $1.95 billion. Even the Air Force had estimated that $2.2 billion would be more like it.
Then, amid escalation of both inflation and the Vietnam War, the C-5A program encountered major strains and delays. Costs went through the roof. By 1971, the Pentagon had budgeted $1.3 billion to cover Lockheed's share of the overrun. Though most of this would be charged to the taxpayers, Lockheed would take its lumps as well. Early in 1971, Haughton, now chairman, agreed to accept an additional loss of $200 million. That wiped out a modest profit; it even cut into the company's net worth. This news would not be welcome at the annual meeting, but business was business, and this transaction meant that Lockheed could begin to put the messiness of the C-5A behind it. [Rice, C-5A, pp. 8-16, 18, 25, 27, 195; Time, May 31, 1971, p. 78; Fortune, June 1971, p. 69.]
Haughton executed the agreement, headed for the airport, and flew to London to talk about the L-1011 with people from Rolls-Royce. As he later put it, "For about fourteen hours I felt good." Rolls had been buying in as well, and for the same reason: it needed the business. Its 1968 contract with Lockheed had committed Rolls to develop its turbofan, the RB-211, for a fixed price of $156 million and Lockheed to pay $840,000 for each engine. Rolls was also pushing onto new ground. This became apparent as the development of the RB-211 proceeded.
Rolls had been pioneering in the use of carbon fiber, a strong and very lightweight material. In selling the RB-211, a key point had been the firm's intention to build its fan of Hyfil, a proprietary carbon-reinforced epoxy. Hyfil resembles plastics used in today's tennis rackets, and its use in the three engines of an L-1011 stood to save 900 pounds of weight. Such fans must stand up to collisions with seagulls in flight. Hyfil's merits would rest on its ability to pass the chicken test. This involved a cannon that would fire four-pound chicken carcasses at an engine operating at full speed on a test stand. The blades broke under the impact, which meant that these blades would have to use the conventional material, titanium. Titanium was heavier than Hyfil, and this change marked a sharp setback for the RB-211 program.
It was one of a number of problems that drove up the program's cost. As this cost escalated, Rolls reported a loss of $115 million for the first half of 1970. Its chairman, Sir Denning Pearson, turned to the recently-elected Tory government of Prime Minister Edward Heath. The Tories responded by offering a subsidy of $100 million. Pearson, however, had failed to control his costs and hence he would have to go; the firm would have a new chairman, Lord Cole. His board members would include a representative of the government, Ian Morrow, who specialized in healing sick companies. Morrow soon arranged for an independent accounting firm, Cooper Brothers, to audit Rolls' books.
There was ample opportunity for questions, for Pearson had been using accounting practices that made bankers wince. Since 1961, he had avoided debiting the expenses of jet-engine development in the years they were incurred. Rather, he held them over and debited them in subsequent years, as these engines reached their customers. This practice amounted to prorating the development cost against income from sales. In this fashion, Rolls had reported a string of profits prior to 1970. Now it was difficult to know the firm's total liabilities.
The Cooper audit even had difficulty in estimating the cost of completing the development of the RB-211. The 1968 contract had specified $156 million. Early in 1971, it was at least $408 million. In turn, Lockheed had contracted to pay $840,000 for each engine, a price that supposedly would allow Rolls to make a profit. However, the bare-bones cost of production, even without profit, would now be $1.1 million. In addition to this, Rolls would deliver the engines late. As a consequence, it faced penalties for late delivery of an additional $120 million.
All this meant that Rolls was well past the point where an extra $100 million from the government, or even $200 million, could make a difference. Late in January 1971, Lord Cole learned that he lacked the funds to proceed with the RB-211. His board of directors promptly voted to place the entire company in receivership. In a word, Rolls was bankrupt.
This would be very bad news for Haughton. Britain's bankruptcy laws are far more stringent than those in the United States. American law works to protect a company against its creditors, shielding the firm against debts and legal claims while seeking a reorganization that can open a path to profitability. In Britain, however, creditors come first. A company is not permitted to operate if it has no prospect of success. Rather, it must sell off its assets and go out of business.
Though the Rolls-Royce board reached this decision on January 26, it did not announce it publicly. A week later Haughton, newly arrived at the Hilton Hotel, received a phone call from Lord Cole of Rolls: Could they meet privately at the Grosvenor House? Cole proceeded to tell him the news, which was both unexpected and crushing. When other executives arrived, for a  previously scheduled luncheon, they found Haughton looking "as if he had got a bullet between the eyes."
The bullet was aimed more at Lockheed than at its chairman, for those engine intakes on the L-1011 now were all too likely to suck the company into its own bankruptcy. There simply was no easy alternative to the Rolls engines. To turn to Pratt & Whitney for its JT-9D turbofan or to General Electric for its own commercial engine, the CF-6, would cost a year in time and $100 million in development costs. That was because neither of these engines would slip in neatly as a replacement. There would be need for extensive redesign of engine housings and installations, starting with wind-tunnel tests, proceeding through reconsideration of weight distributions, and ending with extensive new tests necessary to win FAA certification. Lockheed would receive a triple blow: a massive overrun, a set of prices charged to airlines that would bring further losses on each sale, and penalties payable to the airlines for late delivery.
In addition to this, Lockheed already was deep in hock, having drawn $350 million from a $400-million credit line held by a syndicate of its banks. It could not seek help from the Defense Department; the settlement of the C-5A had also settled other outstanding issues. The company's stock was depressed. Worse, the L-1011 itself was stirring little interest. Though it had pulled in as many as 168 orders back in 1968, the total since then had grown by only ten more. Lockheed had not booked a single order for it in over a year. Yet to abandon the L-1011 was unthinkable. Its overhang of bank debt could drive Lockheed into insolvency as well.
Rolls' receiver, Rupert Nicholson of Peat, Marwick, and Mitchell, took control of that company on February 4. On the same day, the bankruptcy was announced in the House of Commons. As one official told the magazine Fortune, "The news was like hearing that Westminster Abbey had become a brothel." Prime Minister Heath might have bailed everyone out by nationalizing the whole of Rolls, but he had excellent reason not to do so. His legal advisers held that by doing so, the government could become liable for Rolls's debts, the magnitude of which was unknown even to the auditors from Cooper Brothers. Instead, Heath would take over only the portions of the company that were building military equipment. The receiver could sell off the division that was building the famous motorcars, which was profitable and would readily find a buyer. As for the RB-211, Heath would leave it to twist slowly in the wind.
This approach drew vigorous objection in Parliament. Jeremy Thorpe, leader of the Liberal Party, stated that the L-1011 would then be "the largest glider in the world." Worse, a default on Rolls's contract with Lockheed would "throw into doubt our credibility, our commercial competence and our good faith in all spheres of advanced science." Labour M.P.'s raised the issue of jobs for the some 24,000 people who were working on the RB-211 at Rolls and at its subcontractors and suppliers.
Faced with such arguments, Heath unbent slightly, agreeing to have his defense minister take a closer look at the engine's prospects. This minister, Lord Carrington, appointed three investigators that he called his "ferrets," whose report a few weeks later struck a more hopeful note. The RB-211 was meeting its performance goals in runs on the test stand. This was important; it meant the engine after all could be a technical success. Moreover, its development could go to completion for an extra $288 million.
Even so, the odds were formidable against saving the RB-211, and hence Lockheed. Twenty-four banks were directly involved as Haughton's creditors. All were highly averse to risk. Nevertheless, they would have to live with it and accept more; they might even have to throw good money after bad. Nine customers also had ordered the L-1011. Each had its own financial problems and could solve them in part by enforcing contract provisions requiring Lockheed to pay out money as a penalty for late delivery.
Though his hand was weak, Haughton was not without cards of his own to play. The banks, after all, wanted him to succeed; a Lockheed bankruptcy would leave them with bad debts, whereas with forbearance they might yet continue to hold profitable loans. The customers also had reason to stick with the L-1011, for they had already laid out substantial down payments. They also had purchased this airliner on highly favorable terms. This had resulted from Lockheed's competition with the McDonnell Douglas DC-10, wherein Lockheed had won orders by lowering its price and sweetening the terms of sale.
Even under the best of circumstances, the problems with the program would bring delays of several months in delivering the L-1011. However, most major airlines had lost money in 1970. They were in no hurry to receive the new airliners in accordance with the contracted schedule. To the contrary, delays in delivery would also put off the dates when they would have to pay the balance of the purchase price. The chairman of TWA went so far as to suggest that "a delay of a year would have as many advantages as disadvantages, maybe more."
Hence, the report to Lord Carrington meant that the outlines of a deal could begin to emerge. In essence, it would call on everyone to go back to Square One and renegotiate their contracts, paying little heed to the legal commitments of the previous years. Heath would need assurance that Lockheed would indeed stay in business and would not abandon the L-1011. Haughton would need more money from his bankers to give him a base from which to offer such guarantees. He also would have to pay more for his engines, while waiving penalties for late deliveries. For their part, the airlines would have to accept higher prices and later deliveries for their airplanes, again without receiving penalty payments.
Haughton now was the man who had to make it come together. He had a prodigious capacity for work, on which he now drew. Often he had flown in from the East Coast in his Lockheed JetStar, sleeping en route on a couch, checking in at home for a quick shower, then reaching his desk at three or four in the morning to begin his day's work. He also had extensive experience as a salesman. In this business this certainly did not make him a Willy Loman in the play by Arthur Miller, riding on a smile and a shoeshine. It meant, rather, that although he was Lockheed's chairman, he had a strong personal involvement in its sales. If an airline executive raised a question, Haughton himself might turn up the next day in that person's office to answer it.
In dealing with his banks and airlines, Haughton had to do a lot of hand-holding. Two financiers, one a vice-president from Bank of America and the other a vice-president from Bankers Trust, accompanied him on his travels, as representatives of the entire banking syndicate. Still, each airline and every bank would have to agree that such a deal would represent the best possible outcome for its investors and stockholders. Each of them would naturally prefer to hold back and try for better terms. All would have to agree at the same time, however, or the chance for a deal would fall through. As Nixon's treasury secretary, John Connally, put it, "Dan, your trouble is you're chasing one possum at a time up a tree. What you've got to do is get all those possums up the tree at the same time."
The most elusive of those possums would be the U.S. government. Early that spring, Haughton became aware that he could build a fragile arch that might support Lockheed, Rolls, and the L-1011. Its keystone, however, would be a new line of bank credit totaling $250 million. Lockheed lacked the assets to pledge as collateral, and its creditors would certainly demand security. That might be available, however, through a federal loan guarantee, a pledge that the Treasury would reimburse the banks if Lockheed should fold. On May 6, Connally met with Nixon at the White House and announced that the Administration would send the necessary legislation to Congress.
There it would face a minefield of opposition. Congressman Wright Patman, chairman of the House Banking Committee, had blocked federal support for the bankrupt Penn Central Railroad only a year earlier. He was highly skeptical of the proposed Lockheed loan guarantee. Senator William Proxmire, slayer of the SST and a harsh critic of Lockheed, was ready to filibuster against the bill. Though Lockheed was an important defense contractor, the L-1011 was entirely a commercial venture. If the firm went bankrupt, the Pentagon would find a way to rescue its military projects, most likely by having other aerospace firms buy up the pertinent company divisions. Moreover, the L-1011 was to use British engines, a point that did not escape the attention of lawmakers with ties to General Electric and Pratt & Whitney. An alternative, the DC-10, was already on the verge of entering service.
Weighing against these arguments was a single word: jobs. Haughton, testifying before Patman's committee, stated that as many as 60,000 people would be out of work if the L-1011 were to fail. The Democratic Party, which controlled both House and Senate, was still the party of Senator Hubert Humphrey, the presidential nominee of 1968 and a strong labor man. Having shot down the SST as recently as March, Congress could not lightly affront the unions a second time, particularly since the country was still in a recession. Moreover, 1972 would be an election year.
The outcome was thin indeed. On July 30, the House approved the bill, 192 to 189. The measure then moved to the Senate, which was to recess for a month on Friday, August 6. Haughton, however, had warned that by September, Lockheed would be out of cash. The Senate leadership responded by bringing the bill to a vote the previous Monday.
California's Senator Alan Cranston, a principal backer, had been doing the nose-counting and calculated that it would lose by the margin of a single vote. He tried to win over Lee Metcalf of Montana, whose no vote seemed soft, and as the calling of the roll reached its conclusion, Metcalf saw that his vote was likely to be decisive. He told Cranston, "I'm not going to be the one to put those thousands of people out of work." He voted yes, and the loan guarantee passed by a margin of 49 to 48. [Newhouse, Sporty, pp. 48, 153, 173-183; Eddy et al., Disaster, pp. 100-104, 120-121; Fortune: August 1, 1969, p. 77; June 1971, pp. 66-71, 156-160; Business Week: February 13, 1971, pp. 64-68; March 13, 1971, pp. 42-43; January 29, 1972, pp. 72-74; Time: February 15, 1971, pp. 68-69; February 22, 1971, pp. 84-86; May 31, 1971, pp. 78-79; August 9, 1971, p. 57; August 16, 1971, pp. 70-72; Newsweek: August 9, 1971, pp. 51-53; August 16, 1971, pp. 65-66.]
With this, the main stone of Haughton's arch fitted into place. The threat of a Lockheed bankruptcy receded, while Rolls now could emerge from its own receivership. With its RB-211, it would become a leader in the business of building engines for wide-body airliners. In turn, Lockheed now was free to proceed with its L-1011.
The L-1011 did not succeed in the market. Though the program went through development and production, Lockheed went on to construct only 252 of these airliners, rolling out the last in 1983. The program did not earn back its development costs; in fact, this firm sold few if any at a profit, for this company faced strong competition first from the DC-10 and later from the Boeing 767 and Airbus A-300. Hence to win further sales, Lockheed had to offer prices that were very low. The program had received over $1.7 billion at the time of the near-collapse of Rolls; the final losses, at the time of program cancellation, came to $2.5 billion. With this, Lockheed retired from the ranks of the commercial planebuilders and proceeded to make its living entirely as a military contractor. [Newhouse, Sporty, p. 4; Fortune, June 1971, p. 68.]
By contrast, Boeing came back strongly following its own brush with bankruptcy. Though the company's sweeping layoffs were painful, they were part of a set of management reforms that brought sharp reductions in the time necessary to build a 707, 727, or 737. In 1966, this had averaged 17 months, from customer order to delivery. By 1972, it was down to 11 months. "You may ask why the hell we didn't do that earlier," said Jack Steiner. "We never had to. We could have done better. Any time you're threatened with extinction you develop abilities you didn't know existed."
In turn, the company saved itself by offering new versions of its narrow-bodied 727 and 737. To compete with the wide-bodies, they needed new features: longer range, quiet engines, low operating cost, plenty of seats for the purchase price. Boeing introduced such improvements, which amounted to offering more airplane for the purchaser's dollars, and won new income through increased sales.
At the nadir, in 1971, Boeing indeed had been close to ruin. Production of the 707, 727, and 737 was forecast to fall to three per month during 1972 (not three of each model but three of the entire group). The SST was dead, and sales of the 747 were flat. As sales of the improved 727 and 737 took hold, prospects did brighten. By late 1974, production of the three narrow-bodies was up to 15 a month. Debt went down rapidly; in 1973 alone, Boeing paid off nearly half a billion dollars. Better yet, orders for the 747 finally picked up. In 1978, the company was back on its feet and was strong enough to launch not one but two new programs: the 757 and 767. [Steiner, Problems; Steiner, Jet Aviation, pp. 31-34; Pedigree, pp. 67-68; Business Week, April 1, 1972, pp. 42-46.]
The demise of the SST might have opened a major opportunity for the Concorde. Early in 1973, however, Pan Am declined to exercise its option to purchase these airliners, noting "significantly less range, less payload and higher operating costs that are provided by the current and prospective widebodied jets." TWA, Pan Am's principal rival, followed suit by declining to exercise its own option, with its chairman noting Concorde's "dismal economics."
Significantly, these U.S. carriers made these decisions nearly a year before the energy crisis sent the price of fuel soaring. The airlines of the 1960s had grown rapidly in an era of cheap fuel; the price of jet fuel was only 11 cents a gallon in 1973, and builders of the SST expected the price to stay at this level for the next two decades. Needless to say, it did not; to the contrary, the second and more severe oil crisis, in 1979, pushed this price above a dollar per gallon. Though this hurt all of commercial aviation, it particularly hurt Concorde whose supersonic speed demanded high fuel consumption. In the end, only 14 of these aircraft entered service, divided equally between British Airways and Air France. Taxpayers' subsidies built those planes, and to paraphrase Sir Winston Churchill, rarely have so many given so much for so little. [Knight, Concorde, p. 100; Newhouse, Sporty, pp. 12, 227; Owen, Concorde, p. 235; Costello and Hughes, Concorde, p. 11; Astronautics & Aeronautics, April 1970, p. 50.]
These developments unfolded in the wake of the House and Senate votes of 1971. As exercises in raw vote-counting, the narrow margin of the Lockheed loan guarantee — 192 to 189 in the House, 49 to 48 in the Senate — recalls the near-death of NASA's shuttle/station a year earlier, which survived by 53-53 in the House and 32-28 in the Senate. Even the players were the same, with Senators Walter Mondale and William Proxmire playing active roles in both controversies. Proxmire had also taken the lead in the fight against the SST. [Aviation Week, July 5, 1971, p. 19.]
The two votes, however, had very different meanings. The shuttle/station was a standard federal project, of the type that NASA had been set up to pursue. Though critics challenged the wisdom and desirability of such an enterprise, no one sought to repeal the Space Act of 1958, which had created NASA and gave it the charter to pursue such initiatives. In turn, this challenge proved to be addressable through such means as having the shuttle stand on its own, supporting it with an Air Force endorsement, and allowing the station to fade in significance. By mid-1971, the Shuttle was well past its time of danger in Congress, as its funding authorization passed the House on a voice vote and the Senate by a vote of 64 to 22. [These senators were liberal Democrats. More importantly, they were from Wisconsin and Minnesota, which lacked important aerospace corporations. Other liberal Democrats took different views, reflecting the interests of their states. Senator Alan Cranston (D-Calif.) took the lead in fighting for the Lockheed loan guarantee, because that company was a major employer in his home state. Senator Henry Jackson (D-Wash.) was known as "the senator from Boeing" because of his strong support for that company. Newsweek, October 8, 1962, pp. 25-28.]
In both the SST and Lockheed debates, however, the issues were more far-reaching. Though the drama of environmentalism captured the headlines, the SST debate also introduced a disturbing economic question: Was the federal government to provide funding for this project as a risky venture that could not win financial support in the private sector? Similarly, the Lockheed loan guarantee amounted to proposing that Washington should underwrite a line of credit that this firm could not back with collateral, and that therefore was also too risky for banks.
Neither of these ventures were simple exercises in corporate welfare. Federal support for the SST was to be repaid through royalties from sales. Recall the remarks of the project manager, William Magruder, that the SST would return a profit to the government by selling 500 of these airliners. Similarly, the funds advanced to Lockheed came from banks, not from the Treasury, with the loan guarantee merely providing security in lieu of collateral. Both ventures, however, were controversial because they opened the door for the government to assume risks that had traditionally rested within the domain of corporate finance, with its banks and securities markets.
In the face of these well-founded objections, the House and Senate nevertheless voted to support Lockheed, even though their members were well aware that they might be setting an unwelcome precedent for further such interventions. In doing this, Congress showed that it would fight the aerospace recession by passing a measure — the Lockheed loan guarantee — that went well beyond the usual demand for pork-barrel spending to provide jobs during hard times. This meant that to support the aerospace industry in its time of difficulty, Washington would go the extra mile and would enact legislation that ordinarily it would not consider. Against this background, the Shuttle, which had stirred such controversy during 1970, appeared in 1971 as a straightforward initiative that could win backing on its merits. In this spirit, though continuing to face opposition within the Office of Management and Budget, the shuttle would gain support where it counted most: from Nixon himself.