Jet-Age DC-3?

Douglas Aircraft Co., for decades a symbol of U.S. world supremacy in commercial aviation, made a low bow to foreign competition last week, and by so doing put itself in position to pick up a pretty penny. In Manhattan, President Donald Douglas Jr. announced that it was joining with France's Sud-Aviation to sell Sud's up-to-80-passenger, 500 m.p.h., twin-jet Caravelle airliner in world markets. Douglas got exclusive sales rights in the U.S. and Latin America, plus parts of Asia and Africa. At first, all planes will be built in France, but when Douglas orders get big enough (more than 50), Douglas will make the Caravelle in the U.S. This means that Douglas will probably not build its DC-9 medium-range jet, hopes that in the Caravelle it has the jet-age equivalent of the DC-3.

Douglas production may not be long acoming. Hardly was the news on the tickers when the Caravelle made its first big U.S. breakthrough. In Denver, United Airlines announced a $60 million order to Sud for 20 Caravelles (with an option for 20 more), the first time that United has bought anything but U.S. planes. Another Caravelle has been sold in the U.S. to Jet-Engine Builder General Electric Co., which will use the plane as a flying showroom for its new CJ-805-23 aft-fan engine, which delivers more thrust for lower fuel consumption than standard jet engines. G.E. sees a bright future for the medium-range French plane, and wants its engine to replace the Rolls-Royce power plant now in the plane.

Right Plane, Right Time. The Caravelle's victory was a classic case of a hustling company's building the right plane at the right time for the right price. While U.S. planemakers sewed up the market for big, long-range jets (441 orders worth $2.2 billion), no one was producing a smaller jet for routes of less than 1,000 miles. Starting in 1951, Sud got to work on a transport that could operate economically between cities only null apart. Price: between $2,500,000 and $3,000,000--about half the cost of a DC-8 or Boeing 707. The first flights of the new plane with engines placed near the tail were so successful that eight airlines (among them: Air France, SAS, Alitalia, Sabena, Varig) have ordered 60 planes. The experts think that is just a starter, forecast a potential North American market of 500 Caravelles as replacements for aging piston-engined craft.

The man who gets credit for the Caravelle, and for turning Sud-Aviation into France's biggest planemaker (22,000 employees), is Georges Hereil, 50, a bluff, breezy businessman who operates his nationalized company with a free-enterprising flair. "Private or public company," says Hereil, "I've got the same philosophy --to make money for our shareholders." When Hereil took over in 1946, he knew little about planes beyond how to fasten the seat belt. He had started out as a liquidator of ailing companies, by World War II had dealt with 800 sick businesses ranging from a concert hall to bakeries and grocery stores.

Up from the Boxes. At the time, Sud was struggling along, making iceboxes and gas generating engines to stay alive. Hereil shook up design and production teams, got the government's O.K. to develop the Caravelle. From the first the Caravelle was aimed at the big U.S. airlines. Bolts and rivets for all removable parts were made to U.S. standards. Says Hereil: "I don't believe in commercial chauvinism." Financially, Sud-Aviation shows the strain of the Caravelle's $80 million development cost. The company showed a loss on 1959 sales of $100 million, will also lose money in 1960. But the company is deep in missile work, has kept its refrigerator business growing until it is France's third biggest producer with 60,000 units annually. President Hereil also looks for help from Sud's booming helicopter business; Sud has had 500 orders for its efficient Alouette jet, now flying in 22 nations, is developing a three-jet, 24-passenger whirlybird and a ten-ton flying crane.

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