AVIATION: Northwest Exit

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A smoldering feud at Northwest Airlines blazed into the open last week. President Harold R. Harris resigned because of "basic and irreconcilable differences of opinion . . . between myself and a group who presently constitute a majority of the company's board of directors."

A veteran airman, Harold Harris, 58, was Chief of Staff for the Army's Air Transport Command in World War II, Pan American's chief of Atlantic operations when Northwest's board of directors hired him to take over 14 months ago. Under President Croil Hunter, who moved upstairs to board chairman, Northwest had been plagued by maintenance and pilot troubles, high operating costs and a shortage of equipment. Harris leased four DC-6Bs, ordered six Lockheed Super Constellations, and worked out long-range plans for modernization and expansion, including a new heavy-maintenance base at Minneapolis. His policy was, as he put it last week, "spending money to make money."

But Harris ran into stormy weather with the board. About 25% of Northwest's common stock is owned by Wertheim & Co., or held for customers of two New York brokerage firms, Merrill Lynch, Pierce, Fenner & Beane, and Carl M. Loeb, Rhoades & Co. They have a tight grip on the board. But Harris felt they were less interested in long-range plans than in the quick resumption of dividend payments that would increase the market value of their common stock. To the board's distress, the stock sank lower under Harris, from 14½ in January 1953 to a year later, though net operating income rose 81% during 1953, from $693,000 to $1,277,000.

In January, when Harris was temporarily laid up by a heart ailment, Vice President Malcolm S. Mackay, who was named executive vice president a fortnight ago, took the controls. At the same time, the board rescinded its earlier approval of Harris' long-range program and decided to defer payment of the quarterly preferred-stock dividend. That knocked the common down another 1½ points, to 7½. The next day, without a word to President Harris, an executive of the company notified a St. Paul newspaper that Harris was out.

The report was premature, but it was only a matter of time before it came true. This week Northwest was shopping around for another president.