To the Big League

A pair of 1,200-h.p. Wright Cyclonesrowling in a hangar; a glimpse of green fields through a hole in the overcast; 200m.p.h.; an odd pressure in your ears; a old jet of air in your face; a pretty hostess handing you hot chicken; a sleek transport drifting in to a landing, flaps extended like an old lady spreading her skirts as she sits down; a lean beacon fingering the dark. An airline is all these things, and it is a dollar-&-cents business. Last week the U. S. airline which once was shakier than most in dollars & cents took its place in the major league of Big Business--the stock of American Airlines, previously on the Curb, was listed on the New York Stock Exchange.

American Airlines was born just ten years ago, when Wall Street suddenly decided that aviation was to be the next great industry. A dozen or so big underwriters formed Aviation Corp., sold $35,000,000 worth of stock and with the proceeds bought up some 80 aeronautical properties, including 9,100 miles of airlines. These were presently lumped into American Airways. As might have been expected, the conglomeration had an operating loss of $3,400,000 in 1930. Successive losses brought continued shake-ups in management until 1932, when Plunger Errett Lobban Cord got control after a spectacular proxy battle.

Cord management succeeded in cutting the deficit down to $600,000 in 1933 but next year the notorious airmail cancellations dealt American Airways a $4,500,000 wallop and it had to reorganize, emerging in its present form as American Airlines, Inc. The same year American got its present president, homespun, slangy Cyrus Rowlett ("C. R.") Smith of Texas.

"C. R.," who began as an accountant, found himself boss of an incredibly disjointed network sweeping across the U. S. from Boston to Los Angeles, flown by an assortment of Condors, Vultees, Stinsons, and generally regarded in aviation as the weakest of the big lines. Last year, by contrast, American was the only transcontinental line to show a profit--$213,000--while its two competitors, United and TWA, lost $997,000 and $773,000 respectively. American is today the biggest and fastest-growing airline in the U. S. In the first four months of 1939 its passenger revenue was 26% over a year ago.

C. R. Smith arranged the five-year transition with the help of two vice presidents, Ralph Damon and Charles A. Rheinstrom. Brought from the presidency of Curtiss Aeroplane & Motor Co., energetic Ralph Damon modernized and standardized American's fleet, which now consists of 50 Douglas "flagships," and has the magnificent operating record of no passenger fatalities since January 1936. High-powered Charles Rheinstrom pepped up American's sales technique, invented airline "scrip," since adopted by the major domestic lines. In advertising, C.R. Smith and his two first lieutenants were equally progressive. One of their headlines: "Fewer Husbandless Nights."

American's stock, with 290,000 outstanding shares (biggest single owner, Errett Cord: 20,000 shares), is considerably smaller than the average issue admitted to the Big Board. And American, having been listed on the Curb only three years, has neither the profit record nor the "seasoning" that has traditionally been required for Stock Exchange listing. But the exchange was glad to list American as the largest unit of a growing industry. American is glad to have the more active market on the Big Board, for it may be obliged to issue more shares to improve its current weak cash position. Due to heavy purchases of new planes, its cash on hand is only about $1,030,000. Though it has still to pay a dividend, American sold last week at $25, within $1.25 of its 1939 high.

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