The recovery pumps life into sagging companies
Braniff Flight 200 from Dallas/Fort Worth to New Orleans last Thursday morning was by far the most important in the airline's turbulent history. After being grounded in bankruptcy for almost two years, Braniff was back in business. It took off with freshly painted red-white-and-blue jets, a new major stockholder in the Hyatt Corp., competitive fares, fewer employees and a slimmed-down route system serving 19 cities, vs. 49 before. Said William Slattery, 41, the former TWA executive who heads Braniff: "We are looking to direct ourselves in ways that are so basic that they can't be easily countered by any competing airline. We want to project a staid, comfortable, conservative image that is nothing like the freewheeling one Braniff had in the past."
The airline's new self-confidence is typical of several major companies that are bouncing back after being given up for dead. All were victims of external economic problems and their own excesses:
too much diversification or too swift expansion or poor relations with their unions. Nonetheless, they managed to find the money and talent to keep going.
They are, say Wall Street watchers, the beneficiaries of hard work, luck, a rapidly reviving economy and, above all, a will to survive.
Braniff's plight was worse than that of most U.S. airlines. Nearly all were ravaged in the late 1970s and early '80s by problems ranging from rising fuel costs to competition from upstart cut-rate carriers. Under the brash leadership of former Chairman Harding Lawrence, Braniff began to add planes and expand routes just as the economy was dropping into recession and oil prices were heading for another sharp increase.
By 1982 Braniff was $1 billion in debt and snarled in a suicidal fare war with its archrival and fellow Dallas-based carrier, American Airlines. At one point Braniff asked its employees to forgo temporarily $8 million in pay to help meet other expenses. Then in May 1982, lacking cash for food, fuel and salaries, Braniff became the first U.S. trunk airline to file for bankruptcy. Its planes were flown to Dallas and stored, while its management searched for ways to bring Braniff back to life.
The airline's savior was Chairman Jay Pritzker, 61, of Hyatt, the hotel-operating company. Pritzker and Braniff put together a deal that gave the carrier $70 million to get back into business, while Hyatt got control of 80% of the airline's stock. Everyone, it seems, gave up something. Braniff s workers saw their ranks dwindle from 9,400 to 2,200 and their pay shrivel: pilots agreed to annual salaries of $38,000, vs. an industry average of $68,900. Creditors approved the revival plan, as did most of Braniff's unions. Slattery was recruited from TWA. In December the final details were worked out, and the carrier got ready for last week's rebirth.