AVIATION: 1958 & Beyond

Over the U.S. aircraft industry last week hung a darkening cloud of ominous rumors. They were caused by the proposed U.S. Air Force budget. As congressional hearings went on behind closed doors. Wall Streeters were busily trying to figure which companies would be able to fly off with the biggest share of the contracts. Aircraft stocks bounced up and down like jets in a thunderhead. North American Aviation was down from a 1956-57 high of 49⅞ to 31⅞ while General Dynamics jumped 3¼ points to a new high at 61¼, followed closely by Boeing with a gain of 2⅛ points.

Not Men, Missiles. Behind the speculation was a major change in U.S. air defense. Beginning this year, the U.S. will buy fewer manned aircraft than originally planned, will sharply accelerate the shift to guided missiles. After spending only 10% of its procurement funds on missiles in 1954, the U.S. will boost the outlay to 35% ($1.7 billion) for unmanned warbirds, and probably achieve a 50-50 split by 1960. For planemakers who have concentrated heavily on standard air frames, it will mean a rapid rejuggling of their production, the prospect of some thin years.

The budget calls for a $4.6 billion expenditure to buy 1,515 new aircraft—some 1,000 fewer than originally intended, and the lowest number since 1954. Of the total, more than 50% will go for the eight-jet Boeing B-52 bomber and its smaller aerial nursemaid, Boeing's KC-135 jet tanker. All told, the Air Force will order 480 B-52s and KC-135s (cost: $6,000,000 and $4,500,000 apiece respectively), leaving only $2.1 billion for all other planes.

One big cutback will be in "Century Series" supersonic fighters, which currently comprise a big chunk of aircraft production. In the reduction, McDonnell Aircraft will probably make fewer F101 Voodoo fighters than it had hoped, is busy working on a family of supersecret missiles to take up the slack. Lockheed, too, may see some slowdown in orders for its sizzling (upwards of 1,300 m.p.h.) F-104 Starfighter. The Pentagon plans to close out several wings in the Air Defense Command and Tactical Air Command, some of which were to be equipped with F-104s. Yet Lockheed denies any cuts in planned F-104 production, reportedly has firm orders for hundreds of planes. Lockheed's commercial backlog is also fat with orders for Constellations and its new turboprop Electra airliner.

Covering the Bets. Probably the best example of the industry's problems and prospects in the new Missile Age is famed old North American, whose proud boast is that it has made more airplanes than any other company. With its F-100 Super Sabre due to be phased out, it has a newer F107 version competing with Republic Aviation's F-105 in a Mach 2 fighter-bomber program.

Covering its bet on the F-105, North American is also building the long-range ramjet Navaho missile. But development of better missiles may cut back the Navaho program by a sharp 90% in 1958. Yet North American expects to be in healthy shape. Along with Boeing, the company is deep in design studies for a radical new supersonic bomber. Even better, North American was one of the first to jump into rocket engines, and its Rocketdyne division has juicy contracts for missile projects, including the huge Martin and Convair ICBMs.