Word: tristar
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Dates: during 1970-1979
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...after two grave errors. The company contracted to develop and build the huge C-5A cargo plane for the Air Force at a price that later seemed arbitrarily low. And it decided to bank on Britain's Rolls-Royce, Ltd. to deliver engines for its 256-passenger L-1011 TriStar super jet for a price too good to be true. Both the C-5A and the Rolls-Royce engine turned out to be riddled with "unk-unks," industry slang for "unknown unknowns." Last October, after cost overruns on the C-5A had enraged Congress, the Air Force reduced its order...
With help from the White House, Lockheed has been trying to renegotiate its contract with the British government and get the engines. Last week the two sides continued their meetings in Washington, still with no apparent result. If no deal can be made, Lockheed could still save the TriStar by buying engines from either Pratt & Whitney or General Electric. But that plan would put the plane's production even farther behind that of McDonnell Douglas' competing DC-10, deliveries of which are expected to begin later this year. Faced with the prospect of long delays, Delta Air Lines...
...British government proposed formation of a new company, to be owned 50-50 by it and Lockheed, that would produce RB-211 engines for the TriStar. The partners would pledge by cross-warranty to carry on-the British to keep producing. Lockheed to keep buying. The government would immediately put $144 million into the new firm. That may sound good for Lockheed, as this figure is Haughton's own estimate of the money that will be required to complete development of the engines. But there is a catch: Lockheed would have to pay any further development costs-and British...
Profitable Delay. Lockheed's customers and creditors are anxious to save the company because they have so much money tied up in the TriStar. Eastern Air Lines, TWA and Delta have advanced more than $200 million in down payments for the plane. The airlines were supposed to begin flying the TriStars this November, but their executives will be happy to wait. Burdened with overcapacity now, they figure that they will be able to report higher profits this year if they do not have to pay for an expensive new jet. If it accepts the British terms, Lockheed will probably...
Beyond negotiating a better deal with the British, Lockheed's choices are limited. It could switch to General Electric or Pratt & Whitney engines for the TriStar, but that, too, would mean delay and additional expense. The other visible alternatives are a shotgun merger or financial collapse...