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Jet Losses. The planemakers are not yet making money on their commercial jets, although the jets have proved to be enormously profitable to the airlines. Boeing has delivered 55 of its 7075, has orders for 197 in all. But it still needs orders for 50 more before it can hope to turn a profit, is losing $500,000 to $750,000 on each one it delivers. Douglas Aircraft last week won FAA certification for its DC-8, which will be put in service this month by United and Delta airlines. Even though Douglas has 143 planes on order, it needs to turn out many more before it can make a profit on the liner. General Dynamics' Convair Division has spent $57 million to develop its long-range jet 600 and shorter-range 880. But so far it has orders for only 79 of the planes, needs triple that—or more—to turn a profit. Lockheed spent $50 million to develop its turboprop Electra, and has orders for 178. But it needs to sell 100 to 200 more to break even. The planemakers are confident that they will sell all the planes they have to—and then some. But they are playing safe, in case they have guessed wrong. They have written off most—or all—of their heavy development costs so they will not be a burden in future years. If the planes are sold, profits will be fat. Lockheed's Chairman Robert Gross pointed out that in 1946. when Lockheed began to sell its Constellation, the company set a sales goal of 135 Connies as the break-even point "and prayed for the best." All told, Lockheed sold 856 Connies for more than $1.5 billion—and a fine profit.
The Fat. Paradoxically, the companies that were fattest with profitable commercial and defense projects when the missile buildup began have moved the slowest into the new art, largely because they were too busy.with the present to spend time and money on the future. United's Horner candidly acknowledges that his company was in no rush to jump into rocket engines, because it had all it could do to keep ahead in the race to make better jets. "If we had gone into rockets, we might not have had our J-57-" said he, and the J-57, which powers almost all U.S. bombers and fighters, as well as the commercial jets, has been a big moneymaker. But now, United is spending heavily on rocket and nuclear engines and on dozens of other space projects to get out ahead in rockets as it was in jets.
The Thin. The swiftest and most profitable shift from planes to missiles was made by the Martin Co., simply because it had no choice. It was either that or go broke. When George Bunker, a corporate rescue expert, took over as boss in 1952, the company was deep in the hole (1951 loss: $22 million.). Bunker easily saw that Martin had no future in planemaking. He shifted into missiles and electronics, busily worked to get dozens of Government contracts that looked none too inviting to other companies, because the profit was less than on commercial business. Now Martin has contracts for six different missiles (including the surface-to-surface Mace and the Titan ICBM). more than any other company, making up a plump missile-and-electronics backlog of $600 million. Earnings, on the rise, are expected to hit $4.50 a share this year. Says Bunker: "We were either lucky or smart, and we don't care which. We got in first, and now we've really got our arms around this thing."