Mr. Mac & Messrs. Douglas

Chairman James S. McDonnell, 67, of St. Louis' McDonnell Co., builds some of the world's best airplanes, and has become even better known by making NASA's Mercury and Gemini space capsules. He is also a shrewd and determined bargainer, and he has long had his eye on the Douglas Aircraft Co. He tried a takeover in 1963, only to be rebuffed by Donald Douglas Sr., now 74, an old friend who helped McDonnell get started 28 years ago with orders for DC-3 parts. Last year McDonnell began buying Douglas stock again, and last week he was flying as high as one of his F-4 Phantom jets. After a long board meeting, Douglas announced that it would merge with McDonnell through an exchange of stock; as a starter, McDonnell will buy $69 million worth of Douglas stock that has been authorized but unissued up to now.

Fourth Largest. The new firm, to be run by McDonnell and to be called the McDonnell Douglas Corp., will be the fourth largest U.S. aircraft maker--after Boeing, North American Aviation and Lockheed. The merger will produce benefits for both partners. McDonnell, which has always built military aircraft, will be able to spread its product line, increase its earnings with such well-regarded commercial airplanes as the Douglas DC-8 and DC-9. And Douglas, with McDonnell's backing, should now be able to get loans of about $400 million that bankers were loath to make because of Douglas' shaky financial position. Badgered by delays in parts deliveries and shortages of skilled workers, Douglas in its last financial statement reported nine-month losses of $17 million on sales of $756 million. For 1966 overall, Douglas will probably be $40 million in the red.

For all its financial problems and the fact that its assembly lines at its Long Beach, Calif., plant are inefficiently laid out, Douglas was not lacking in merger offers. After all, the backlog in orders for its big jets has now reached $3.2 biilion, part of it for the DC-8-62, which is the world's farthest-flying commercial jet, with a range of 5,750 miles. Thus, even as Douglas' money problems got worse, plenty of bidders beside McDonnell showed up. Among them were Signal Oil & Gas, Fairchild Killer, General Dynamics and North American Aviation.

Why did McDonnell win? For one thing, he and his associates already held more than 800,000 shares of Douglas --and "Mr. Mac" threatened to keep buying more until he controlled the company. Another reason was that McDonnell, as a proud old airplane builder himself, was more than ready to agree to Donald Douglas Sr.'s request that the family name remain on any new company. Less definite is the future of Donald Douglas Jr., 49, whose presidency was blamed by many for the company's financial woes. Chances are that he will be given a high-sounding title and little if any policymaking responsibility. Mr. Mac will of course take care of management.

"My Teammates." A cool, tough engineer, Denver-born McDonnell calls his employees "my teammates," and he makes them perform as a team. He came up through a brief career as a barnstorming pilot and, after that, as a project engineer at the Glenn L. Martin Co., then started his own plant at the St. Louis airport with $165,000 in savings and money borrowed from, among others, Laurance Rockefeller. Gaining experience and financial strength as a subcontractor on such planes as the DC-3, McDonnell eventually designed and built his own, convinced the Navy that it could fly faster and perform better on two jet engines than on one. McDonnell, with his company now deeply committed to space projects, still takes an engineer's interest in design work. And the next DC passenger ship, whenever it comes, thus may bear enough of his mark to make it the McDC-10.

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