Word: borman
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...often ignored) capitalist doctrine that lower prices lead to higher demand, which in turn creates higher profits. In the first six months earnings jumped 16.3%, and for the full year should hit a record $1 billion. This year's surge, says Eastern Air Lines President Frank Borman, the former astronaut, "has been above our wildest expectation. We have become mass transit, and this may be as revolutionary as the introduction of the jet engine itself...
...what if just about everyone begins to fly cut-rate? The break-even point will rise until airlines can no longer turn a profit no matter how packed the planes may be. Eastern's Borman is worried because his line's revenue is down from 8.840 per passenger mile in the first half of 1977 to 8.60 this year. Consequently, Eastern's break-even point has risen from 55% to 62% of capacity?that is, it makes money only when 62% of the seats are filled. Shuddering at the prospect of the CAB'S approval of another 70% reduction...
...similar capabilities. In a sense, the Airbus is the finest American plane that the Europeans could build; its highly efficient engines are produced by General Electric. The Airbus Industrie consortium has sold 157 Airbuses to 16 airlines, and the largest order, for 23, came from Eastern. In 1974, President Borman began begging American planemakers to build a weight-saving twinjet, but they dallied. Next, a new-generation Airbus, designated the A310, will be a direct competitor to Boeing's planned 767. Already the new Airbus, which seats 200 and has most advanced technological features, has been ordered by Air France...
...Since Borman outraged U.S. planemakers by buying a European plane, Boeing has led a campaign in Washington against what Treasurer Jack Pierce calls "predatory financing." Indeed, Borman got a good deal, which includes a $250 million loan guaranteed by European government agencies. Somewhat reluctantly, the U.S. Export-Import Bank has agreed to try to meet the European terms by making more of low-interest loans available to foreign buyers of U.S. aircraft...
Because of the new masses in motion, the new planes and rapidly changing Government policy, the airlines are flying into uncertain skies. Some of the portents are promising. Says Eastern's Borman: "If people start seeing us as a good replacement for the auto, business could go wild. That's the kind of market we're aiming for. We've taken on the ship and the train, but the private auto is the heavyweight championship." Detroit is not worried yet, but the summer of 1978 has proved that the air travel market can grow much bigger, and that the surest...