Flying Under Pressure

To the despair of British taxpayers, government-owned British Overseas Airways Corp. seems unable to decide whether it should be a profit-making enterprise or a showcase for the country's aircraft industry. Until 1963, when it turned a $16.8 million profit, BOAC had flown in the red since 1959. Last week it found itself in the center of some political turbulence that is almost certain to cause it further financial trouble. Criticizing the airline's management, Labor M.P. Roy Jenkins summed up BOAC's unhappy times: "The trouble started three aircraft types, four chairmen, five ministers of aviation and 80 million pounds of deficit ago."

The Plane Drain. That goes back to 1954, when BOAC's bid for competitive leadership in the jet age went down after a series of crashes of its much-touted Comet1 jetliner. With all the Comets grounded as unsafe until 1958, BOAC concentrated on Britannia turboprops, at the government's insistence buying only British planes. By the time the Britannias were flying the all-important North Atlantic run in 1958, competing airlines had already taken off in the bigger, faster, U.S.-made long-range pure jets. Eventually BOAC got permission to buy 20 Boeing 707s--but only on the condition that it order at least 20 of the new VC-10 jets developed by British Aircraft Corp.

Despite the Super VC-10's improved air conditioning, spacious seating and new safety features, the plane has the disadvantage of costing more to operate and maintain than the U.S. planes. It is also slower, has a shorter range and carries only 175 passengers (v. 189 in the newest Boeings). So far, not a single non-British airline has placed an order for the plane.

When Sir Giles Guthrie took on the thankless job of BOAC chairman last year, he was stuck with an order for 30 unwanted Super VC-10s. In an effort to make BOAC a paying proposition, Sir Giles recently demanded cancellation of the entire order--and the purchase instead of seven Boeing 707s. That, he said, would take care of BOAC'S needs through 1968. Aircraft producers let out a "Buy British" howl, and workers from British Aircraft Corp.'s Weybridge plant marched on Parliament carrying placards: FIRST THE BRAIN DRAIN NOW THE PLANE DRAIN. Aviation Minister Julian Amery said that Guthrie's proposal "would inflict extensive injury on the British aircraft industry."

No Better Than No Worse. The compromise solution worked out last week pleased no one, and left BOAC's troubles unresolved. The government let BOAC off with the purchase of 17 of the 30 Super VC-10s; the Royal Air Force will take three, and production of the remaining ten will be suspended. To meet the payments of $9,000,000 per VC-10, BOAC now needs a larger handout, or perhaps even a write-off of part or all of its accumulated $224 million deficit. Said Sir Giles: "The government will ensure that financially we will be in no worse a position as a result of taking on these aircraft." That was rather negative assurance. Hard-pressed BOAC announced stiff reductions in operating expenses, including staff cuts and the elimination of such unprofitable routes as the one to the east coast of South America.

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