Business: Jets to the South

One of the few U.S. airlines climbing out of the labor fog last week was National Airlines, whose routes stretch along the Atlantic Coast to Florida. On Dec. 10 National will inaugurate the first domestic jet airliner service with daily flights on the rich New York-Miami run. Using 600-m.p.h. Boeing 707s under a complicated lease-stock deal with Pan American, which already flies jets across the Atlantic, National will make the 1,100-mile run in 2 hr. 15 min. To make sure that it can fly jets, National signed contracts with its pilots, flight engineers and mechanics running into 1960.

National is paying well to be the first domestic jet operator. Plans call for three 707s under lease around the first of the year, each one costing an estimated $216,000 per month to operate and maintain. To sweeten the kitty. National has also agreed to a stock exchange that, if CAB approves, will eventually give Pan Am a big voice in its affairs. In a $16 million swap, the two lines will exchange 400,000 shares of stock, and Pan Am will get a two-year option to buy another 250,000 shares of National stock at $22.50 per share. The effect would be to give National a minor (6%) interest in Pan American, while Pan Am could gain 36% of National if it exercises its option.

For National and President George T. Baker, who owns 17% of the line's stock, the deal is almost a must. Competing with Eastern Air Lines along most of its route, National has been hitting bumpier and bumpier weather, is operating a load factor of 52% v. a break-even point of 54%. In the twelve months ended Sept. 30, the line lost $748,944; the year before it had a net profit of $2,484,369. National's main hope is new equipment to attract more passengers; it has orders for three Douglas DC-8 pure jets, another 23 turboprop Lockheed Electras. But its place on the production line is so far back that it will not get the first 400-m.p.h. Electras until six months after competitor Eastern puts the same plane into service; the DC-8s will not arrive until 1960, about the same time as Eastern's.