Word: tristar
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...Lockheed Aircraft Corp. In 1971 the aerospace giant faced bankruptcy because of cost overruns on the C-5A transports it was building for the Air Force; the Pentagon eventually let it escape with a $200 million loss. Almost immediately, Lockheed's effort to build the L-1011 TriStar nearly crashed before the jumbo jet ever got off the ground when Rolls-Royce, builder of the plane's engines, went bust, eventually saddling Lockheed with $190 million in unplanned expenses. That time it took an act of Congress (approval of an unprecedented Government guarantee for $250 million in loans...
That seemed a bearable load, with the TriStar flying and getting high ratings from airline executives-until the fuel shortage hit. Faced with sharp curtailments in jet-fuel supplies, airlines have canceled hundreds of flights and delayed orders for aircraft. Lockheed had expected to collect around $ 150 million in cash in 1974, as final payment on deliveries of nine TriStars to Eastern Air Lines; now the deliveries, and payments, have been postponed until 1975 and 1976. Pacific Southwest Airlines is taking a four-month delay on two more TriStars (price: $20 million each). On top of that, Japan...
Thus Lockheed must wait for cash, while continuing to pay interest at 10% and 11% on millions of dollars borrowed to pay for parts and labor on the partially completed planes. Overall, Lockheed has delivered 54 TriStars, has firm orders for 75 more and options for an additional 70, but the total is still 76 planes below company officials' most optimistic estimate of the break-even point on the project. Without the TriStar, says Vice President and Controller Vincent...
...grant All Nippon one of its long-cherished wishes: overseas routes within Asia. Officials of major Japanese trading houses, who represented the three competing U.S. companies in the negotiations, say that Lockheed was definitely given special consideration by the Japanese. Of All Nippon's decision to buy TriStar, Toru Fukinishi, deputy general manager of the country's international carrier, Japan Air Lines, said: "I was somewhat amazed at this choice." JAL itself last week bought four short-range versions of Boeing...
Though All Nippon and Lockheed vigorously deny that any political pressure was applied, the deal was indeed remarkable. All Nippon's officials say that the key factor in ordering the TriStar was the relative quiet of its engines; yet in noise tests in Osaka and Tokyo, the L-1011 did no better than the McDonnell Douglas DC-10. Moreover, an industry-wide comparison study in the U.S. shows that TriStar's Rolls-Royce engines have had to be removed for maintenance at a rate about three times that of the DC-10's General Electric engines. Early...