An overly ambitious expansion grounds the ninth largest U.S. airline
Recession, price wars and sharply rising fuel costs have gravely wounded the airline industry during the past four years. Last week those troubles claimed their first major victim. Braniff International, the ninth largest U.S. airline, declared bankruptcy. It was the first failure of a major carrier since American aviation came flying out of the barnstorming era in the 1930s.
With a cool precision not always seen on its flights, Braniff in a matter of hours called in its 75 aircraft, canceled all flights, fired nearly 9,000 employees and threw a police guard around its lavish $70 million headquarters building at Dallas-Fort Worth Airport. Flight 501 was on its way toward Hawaii when it made an unscheduled stop in Santa Barbara, Calif., apparently to decide whether the plane should return to Dallas. The choice to continue was made. Captain Bob Gilchrist, the pilot of what possibly was history's final Braniff flight, 902 from Buenos Aires to Miami, heard the message from the Miami tower over his radio: "Whether you know it or not, you have just been terminated. You have been flying for free."
Braniff's end in Dallas came, fittingly, in a driving thunderstorm that had already delayed some takeoffs. Bill Rafter, a salesman from Fort Wayne, Ind., was on the last Braniff flight from Dallas to Kansas City. Said he: "We had waited four hours because of the weather delays, and then we find out that the airline is shutting down." One Dallas couple, Pete and Mary Ann Moxon, had built up enough promotional points by flying Braniff at odd hours to earn a nearly free trip to London. Now, with baby-sitting grandparents already in town from Delaware to free the couple, those plans had to be called off.
Braniff's employees were dismayed. Morale had been high, and many Braniff people had been led to believe that the airline just might make it with its slimmed-down route system, put into effect this past spring, and its aggressively discounted fares, offered beginning last fall. Said Steven Suhn, 30, a Braniff reservations supervisor: "We had two yards to go before the goal line." There were worries, too, among older Braniff employees over what would happen to their company pensions. They are protected under a 1974 law that guarantees at least part of their retirement pay if Braniff ends its pension plans.
Braniff President Howard D. Putnam, 44, had been publicly optimistic to the end. He told shareholders at the annual meeting three weeks ago that the changes he had made had turned Braniff into a "viable airline on the operating cost side."
Last week, though, events moved quickly. The company's last desperate effort to win passengers by slashing prices was not working well enough. Braniff flights had less than half of the seats filled. Early in the week, M. Philip Guthrie, the company's chief financial officer, told Putnam that Braniff did not have enough cash available to pay bills for food, jet fuel and salaries. Airline officials held last-minute talks with other carriers, reportedly including United and Northwest, exploring the possibility of mergers, and solicited new cash from investors.