Net Quandary: Need for a Mid-Sized TrijetAlthough during the 1970s the Boeing 747 did well, there were many routes on Pan Am's network which could not sustain year-round loads, and so the airline sought a smaller aircraft to fill the gap.
Bearing in mind that, in August 1978, Pan American took the initial steps to fulfill a 40-year-old ambition to acquire a domestic route network by buying National Airlines, which had 16 perfectly good McDonnell Douglas DC-10s, the decision to order, only four months earlier, 12 Lockheed L-1011 TriStars, seemed strange. In fact Lockheed had to compromise the design (see opposite page) to provide Pan Am with an aircraft for the "long thin routes
Electing to concentrate on a standardized fleet of Boeing 747s for all its long-haul operations, and impressed with the claims of the European Airbus program, however, Pan Am sold all wide-bodied trijets, including the TriStars, within five years of their acquisition. Most of the DC-10s were sold by June 1984 and the TriStars by February 1986, The first L-1011-500 had gone into service only on 1 May 1980.
Tightening the Belt The finances of the World's Most Experienced Airline deteriorated sharply early in 1980. One immediate reaction was to sell the lease of the Pan American Building on 5 January 1981 to Metropolitan Life for $400 million, the largest real estate transaction for a single building in recorded history. Pan Am had also sold its 50% share of the Falcon Jet Corporation and in 1981 also it sold the Intercontinental Hotels Corporation (I.H.C.), one of the biggest innkeepers in the world, to Grand Metropolitan of London for $500 million.
On 1 September 1981, C. Edward Acker had succeeded William T. Seawell as Chairman. He tried employee ownership plans and public stock offerings, but the drain in the cash flow continued. In a desperate move, and to the astonishment of the entire airline world, a joint announcement on 22 April 1985 revealed the transfer of 23% of Pan American's network ó all the Pacific routes, no less to United Air Lines for $750 million. The sale included the whole fleet of Boeing 747SPs, half the TriStars, and a DC-10.
This extraordinary measure was taken after an excruciating analysis of all other possible options. While the Pacific routes were profitable, were the fastest growing, and served a world region of inexorable growth in prosperity, it did not make so much money as the Atlantic routes; and Acker had to follow the hard facts rather than sentiment or an Oriental future that might never come.
To make matters worse, the political events of 1985 saw terrorism raise its ugly head in Europe, with the public shying away from that destination for its annual vacations. But there were reverberations at the Pan American headquarters in Park Avenue, allegedly caused by Juan Trippe turning in his grave.
Lockheed L-1011 500 TriStar
Traditional Rivalry RenewedThe competition was good while it lasted. Lockheed appeared to have the edge when, in 1967, it first announced its trijet wide-bodied airliner, to return to the commercial business again after it had terminated its turboprop L-188 Electra, program and concentrated on military and space production, notably with the giant C-5A transport. While Douglas followed the rather unexpected customer preference for General Electric as the main engine supplier over the traditional Pratt & Whitney, Lockheed teamed up with Rolls Royce.
With its great production experience, Douglas narrowly won the race for first flight honors. The DC-10 made its maiden flight on 24 October 1970, the L-1011 TriStar on 16 November of the same year. But Douglas pulled ahead, with the DC-10 entering airline service on 5 August 1971, the Tristar on 26 April 1972. Subsequently, both companies experienced setbacks. Lockheed lost ground when Rolls Royce went bankrupt and severely disrupted the TriStar program. Lockheed was saved by the U.S. Senate's approval of the Emergency Loan Guarantee Act (by a margin of one vote) on 2 August 1971. The program survived but Lockheed's competitive stature was badly compromised.
Later, the dice fell against its rival. On 25 May 1979, an American Airlines DC-10-10 crashed spectacularly in full view of a critical audience at the busiest airport in the world, Chicago's O'Hare. Douglas's reputation was in jeopardy for many months, and although it was later exonerated from the vicious charges directed against it, the DC-10 lost many orders to Boeing as a result; and in Pan American's case, may have been one of the factors influencing its choice of the TriStar.
Compromising a DesignWhether by accident or calculated design, Douglas had been able to build a long-range DC-10. While the lighter weight of the TriStar compared with the DC-10 (about ten tons difference) may have given it a slightly superior economic performance, this was more than offset by a critical disadvantage. The DC-10 could be developed by a substantial increase in allup weight ó more than 60 tons. Most of this could be used to advantage by adding enough extra tankage to make the DC-10-30 or the DC-10-40 competitive not only with the TriStar but also with the 747, and 747SP.
In contrast, the TriStar's range could be increased only by a trade-off, and after much heart-searching this was done. The additional range necessary to turn the Lockheed trijet into a transocean airliner was achieved only by reducing the size so as to lighten the all-up weight, at the same time adding extra tankage in place of payload. Thus the economics of the aircraft were compromised. Lockheed could take some satisfaction of knowing that its launching customer was Pan American, but somehow, the old magic was gone. No longer did the rest of the world follow the Juan Trippe standard. In the event, few airlines followed Pan Am's example, and the so-called long-range TriStar was sold to a mere handful of specialized airlines.