Hard Landing (29 page)

Putnam couldn’t believe his ears. Crandall went on, “If you raise your movie price, I’ll raise ours.”

“Bob!” Putnam said. “We can’t talk about that!”

Putnam went to inform United chief Dick Ferris.
Ferris too was dismayed at Crandall’s suggestion.

Putnam flashed back to that conversation on the February morning in 1982 when he stared at a telephone message from Bob Crandall. Putnam checked with Braniff’s in-house counsel. The fight with American had grown very ugly. For Braniff’s protection Putnam, the lawyer thought, might be wise to return the call with a tape recorder running. Putnam did.

“I think it’s
dumb as hell, for Christ’s sake all right, to sit here and pound the shit out of each other and neither one of us making a fucking dime,” Crandall said.

“Well—”

“I mean, goddamn! What the fuck is the point of it?”

“Nobody asked American to serve Harlingen,” Putnam shot back. “Nobody asked American to serve Kansas City.… If you’re going to overlay every route of American’s on top of every route that Braniff has, I can’t just sit here and allow you to bury us without giving you our best effort.”

“Oh, sure, but Eastern and Delta do the same thing in Atlanta and have for years.”

Putnam could sense what was coming. “Do you have a suggestion for me?” he asked.

“Yes, I have a suggestion for you,” Crandall answered. “Raise your goddamn fares twenty percent. I’ll raise mine the next morning. You’ll make more money and I will too.”

“Robert, we can’t talk about pricing.”

“Oh, bullshit, Howard. We can talk about any goddamn thing we want to talk about.”

The conversation ended. Putnam’s lawyer popped the tape from the recorder and filed it away.

Putnam tried other desperation moves. A two-for-one sale. The Great Escape sale. Anything to get a few more people into Braniff’s Easter-colored airplanes. But each promotion was less successful than the last.

And then, just as Braniff appeared to be breathing its last, all of Dallas, it seemed, rallied to resuscitate it. Putnam, weary, haggard, yet perpetually smiling for the television cameras, was becoming a local celebrity, a role he played to the hilt. He began appearing in powerful television spots, displaying a firm and earnest manner. “Texas, we
need your support,” he pleaded. “Fly Braniff now!” Tom Landry, the beloved coach of the Cowboys, filmed another television spot. “Fly Braniff,” Landry begged. “The Cowboys do!” And suddenly the M.B.A.s and computer programmers and sales executives who had transferred from New York with American a few years earlier were the outsiders, the upstarts. They were Yankees—carpetbaggers. Presenting their employee IDs to write checks, some were
sneered at by salesclerks. Bob Crandall’s
children were harassed at school. A
local media war intensified newspaper and broadcast coverage of the fight, with the coverage heavily tilted, as it invariably is in such cases, toward the underdog. American’s shareholders were exposed to the spectacle of television cameras chasing executives around a ballroom at the annual meeting.

Crandall himself was responsible for drawing the worst PR. He
casually remarked within earshot of the press that he would be perfectly happy to see Braniff “go out of business.” That way, he explained, American would be up against “healthier airlines” less inclined to slash fares out of “desperation.” The Dallas business establishment was appalled.

Later a Braniff official said publicly that he thought American was using Sabre to cancel Braniff reservations outright—something that almost certainly never happened. But truth didn’t matter anymore. People in Dallas now believed American to be capable of any ruthlessness. The power of Sabre had taken on mythically monstrous proportions. As a consequence of Braniff’s exaggerated allegations, the U.S. Justice Department commenced its first look at the potentially disruptive powers of computer reservation systems.

The local outpouring in Braniff’s behalf was touchingly evident on a
Sunday night at Billy Bob’s, a barnlike country dancing place that hosted a free party to buck up the morale of the Braniff workforce. The band members sank to their knees and bowed as Putnam came up on the stage and took the microphone, and heartfelt applause went up from the Braniff employees who filled the dance floor. But Putnam was muted and the crowd sullen too. People knew. Travel agents were now treating Braniff like the plague. A rumor swept the dance floor that a Braniff flight from Miami had just landed at DFW with only six passengers aboard.

“We’re gonna do it,” Putnam told the crowd with strained enthusiasm and a limp wave of his fist, and no one, including him, believed it.

The dust-up at DFW caused the Justice Department to empanel a grand jury. Crandall was uncomfortable with the whole situation. “I get nervous when I get a
parking ticket,” he was quoted as saying in
Business Week
. “I don’t like the notion that some ‘authority’ is interested in anything I did.”

In no mood to take chances, Crandall and one of his lawyers climbed aboard an American flight for Los Angeles for consultations at the law firm representing American in the federal investigation. But the flight was stuck on the tarmac. A torrential spring thunderstorm had moved into the area and remained squarely over DFW. Lightning filled the sky. Tornadoes were sighted. Crandall and the lawyer sat in their seats and waited.

Then a pilot emerged from the cockpit and approached Crandall. He bent over, whispered something in the president’s ear, and departed.

“
We’re getting off,” Crandall told his companion, rising from his seat. “Braniff has just shut down.”

Crandall led the lawyer to the rear stairs, which were lowered to allow the two men to deplane. In the great expanse of concrete, ankle-deep in water, the rain pounding and the wind swirling, Bob Crandall and his lawyer, soaked to the bone, stood with their briefcases, waiting for an American Airlines vehicle to pick them up.

Putnam had ordered a Chapter 11 bankruptcy filing, a move that in his judgment demanded the strictest secrecy in advance. Braniff’s assets,
principally its airplanes, were scattered all over the world. Anyone owed money by Braniff, including foreign governments or lending institutions, might well seize any Braniff airplanes within their jurisdiction if they knew a bankruptcy filing was imminent. Putnam wanted every last plane back in Dallas before the papers were filed.

Preserving the element of surprise before the shutdown meant that thousands were severely inconvenienced. At DFW people stared at the TV monitors. “Newark: canceled … Lubbock: canceled … Houston … San Antonio … San Francisco … Orlando … Los Angeles … Toronto …” all canceled. Initially passengers assumed the violent weather was to blame, but later they began to notice that the doors to Braniff’s premises in the airport were strapped and bolted shut. The Braniff planes began parking, forming long conga lines in lime, cranberry, and other festive colors.

Howard Putnam,
dabbing his eyes, his voice cracking, finally went public before a forest of microphones with the announcement that Braniff would fly no more. “The checks that are out there now will not go through,” he said. “There’s no cash to support them.”

Deregulation had claimed its first victim.

The stock prices of other airlines went through the roof, none more so than American. People were suddenly thronging American’s ticket counters. All those new routes laid over Braniff’s system were in place to pick up the slack.
American was soon carrying 64.7 percent of the passengers at DFW, up from 45.7 percent before Braniff failed. Some 96 percent of all the connecting passengers who arrived at DFW on American flights were soon also leaving on American flights, up from 65 percent two years before.

But in the hours following Braniff’s failure there was a small technical problem for American to contend with. At Sabre headquarters officials realized that thousands of Braniff flights were still listed as available for sale in travel agents’ computers across the country. Braniff’s schedule had to be removed immediately, but such a major revision required something on the order of
a system restart, a kind of rebooting operation. A major airline had never failed. There was evidently no easy way to eradicate its flights from the computers.

Actually, it turned out, there was. Somebody
remembered the incident a few years earlier at American’s old headquarters in New York, when Bob Crandall had pulled the Venetian blinds down on his
head while staring angrily at TWA headquarters across the street. Crandall had ordered his aides to design a series of instructions that would enable American to blow every TWA flight out of Sabre instantly. Although the instructions were never used, they remained on the shelf.

With the clouds billowing and the lightning still striking, the program was quickly modified; TWA’s designator codes were replaced with Braniff’s. And with a few keystrokes every trace of Braniff Airways evaporated from the computer reservation mainframes of American Airlines.

CHAPTER 7

WORKINGMAN’S BLUES

I
t is the curse of the airline chieftains: though fleets and schedules respond readily to the manipulations of management, airline finances do not.

To a degree unusual in business, the costs of running an airline are outside management’s control. Fuel, for instance, accounts for roughly 20 percent of the cost of doing business—sometimes much more, depending upon the machinations occurring in the Middle East and the state of balance in the delicate global petroleum markets. Landing fees and airport rentals are another huge and mostly nonnegotiable expense. The cost of borrowing money, set principally by the Federal Reserve Board, is still another significant item, controllable only to the degree that management resists buying the newest and hottest airplanes. In the history of commercial aviation, only Southwest Airlines and one or two others have ever displayed such self-control.

Travel agency commissions became another huge item of expense. For years they had been fixed at 5 percent of the ticket price, but in the deregulation era, with the airlines courting the affections of travel agents both to steal and to protect market share, commissions were spiraling higher, eventually to reach 10 percent, with agents writing an ever larger proportion of the airlines’ tickets.

That left only one big-ticket item under management’s control, and at most airlines it was the biggest of all: labor represented as much as 40 percent of the expense in running an airline.

Airline employees had been in fat city for years. Although a few airlines took brave stands against big wage increases, most agreed to pay their union workers whatever it took to preserve peace on the flight line. The airline bosses were pushovers because they knew that the contracts each of them signed were always quickly matched by every other airline, fixing costs on an equal footing. It was no concern to the airlines that these costs marched higher and higher, as long as the regulators in Washington simply waved through the fare increases necessary to cover them.

When the starting gun of deregulation launched the race to cut costs, the fun was over. A few airlines, such as Delta, held out against the pressure, reasoning that a motivated and experienced workforce was more important to the marketing mix than a reduction in costs. American, and eventually some imitators, tried to lower costs by flooding the flight lines with newly hired b-scale employees, protecting tenured employees from the trauma of a wage cut. But every airline came to feel the same pressure: cut costs in order to cut fares or say good-bye to a franchise that had taken decades to build.

Nowhere was this change more painful than at Eastern Air Lines. Eastern’s labor costs to begin with were slightly higher than average, owing in part to the company’s high proportion of takeoffs and landings to miles flown. Another source of trouble was the fact that Eastern’s bundle of north-south routes made it a vacation airline, with price-sensitive markets that low-cost upstarts were bound to attack. Eastern could defend its market share only by reducing the living standards of its workforce.

But ultimately the labor upheavals at Eastern became violent because this struggle became a contest between two men, each of whom, alas for Eastern, was singularly unsuited to accommodating the other.

One was Col. Frank Borman, who as a former fighter pilot and astronaut knew better than anyone the sensitivity of an aircraft to one’s hands. As a corporate leader also, Borman needed to feel the instant response of the people under his control. The “
command approach to management” was how one of his most loyal aides would
describe his style. Borman—the Colonel, to his subordinates—referred to Eastern’s operations center as “
mission control.” His column in the employee newsletter was titled “View from the Top.” He used a rubber stamp to brand documents with instructions to
RUSH
.

His adversary, Charles E. Bryan of the International Association of Machinists and Aerospace Workers, would not be rushed. Bryan delighted in resisting authority. A short, square-shouldered man with a pug face not unlike Edward G. Robinson’s, Bryan in a way suffered from Frank Borman’s disease: he too had a need to be in charge. Bryan drew his power from a local union organization 13,000 strong, representing nearly everyone who touched an Eastern airplane without flying in it, from the lowliest cabin cleaners to the most skilled engine mechanics.