Catch a Falling TriStar

Lockheed decides to drop out of commercial aviation

Business sense won out over pride last week, as the Lockheed Corp. announced that it was stopping production of its spectacularly unprofitable L-1011 TriStar wide-bodied jetliner. The California aerospace giant has lost $2.5 billion on the TriStar since 1968 and, with airlines currently mired in a three-year-long slump, it could see no relief in sight. Chairman Roy W. Anderson said that there was "no other choice but to begin now to phase the TriStar out in an orderly manner." The company will now concentrate mainly on defense production.

When the last of those jets is delivered in 1984, the American civil aviation business, which still produces 85% of the Western world's commercial jet aircraft, will be down to just two companies: Boeing and McDonnell Douglas. Both of them are also caught in the turbulence of the worldwide slowdown in air travel. Douglas had to swallow $144.3 million in development costs for the DC-9 Super 80 at a time when it sold only twelve DC-10s, and warned in September that it might have to stop production of wide-bodied DC-10s if the Air Force canceled orders for a military tanker version.

Even mighty Boeing is facing a drop in business. The Seattle-based firm has taken only 23 orders for its jumbo 747 in 1981, as compared with 49 last year, and just 24 for the medium-range 727, down from 74 in 1980. Also troubling Boeing is the proposal by American, Air Canada and other airlines to refit their aging 727 planes with new engines rather than Duy the new aircraft the company has designed. Boeing Chairman T.A. Wilson already admits that sales next year will be much slower than in 1981.

Trouble struck Lockheed's TriStar just after the first of the 300-passenger jets rolled off the Palmdale, Calif, assembly line. Production temporarily stopped in February 1971, when Britain's Rolls-Royce, the prime engine supplier, went bankrupt. The British government took over Rolls-Royce's aero-engine division, but demanded proof that Lockheed was financially sound before providing the equipment. Lockheed was indeed in trouble, but Congress approved a controversial $250 million loan guarantee for the company. The first TriStar was delivered to Eastern Air Lines in April 1972, about six months later than scheduled. The delays and uncertainties caused by the Rolls-Royce bankruptcy gave Boeing and McDonnell Douglas an additional competitive lead in the wide-bodied market. Lockheed was never able to make up that disadvantage, even though airlines found the TriStar plane reliable and efficient. The largest TriStar customer was Delta Air Lines, which operates 35 of the 220 now in service, and is buying three of the remaining 24 on firm order.