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Aviation History
1978
1978 - 0018.PDF
20 makes its money carrying passengers in peak periods who can't fly Eastern because Eastern is full, and Eastern's higher off-peak load factors fall well short of offsetting Delta's advantage. Astute readers will wonder why Eastern has been making such efforts to sell TriStars if it is short of seats per aircraft. The problem with the TriStar for Eastern is that "any way you cut it, the TriStar was optimised for ranges up to 1,400 n.m.," as Ray explains. The TriStar is fine for Eastern's longer routes—Los Angeles to Atlanta, Atlanta to Mexico, New York to San Juan—but simply does not yield its best economics on the Eastern seaboard. Eastern's average sector is about 500 n.m., at which the twin really comes into its own. Russ Ray is a former Lockheed man himself, and notes that the European, twin is closer to the original "Kolk machine" concept of a US domestic wide-body—named after Frank Kolk of American—than the TriStar and DC-10-10 eventually turned out. The third engine was a product of the modest thrusts that were expected from the big-fan engines in the early days of the trijet programmes, plus the feeling that some customers crucial to the market wouldn't accept a twin. United, for instance, was still con vinced that no twin could manage the routes it wanted out of Denver. It is futile to wonder whether this was justified. Nobody wondered at the time, and massive launch orders were placed for the trijets. The result was I that a small opening, defined by optimum stage length as much as by capacity, was left in the market. It was one thing for Eastern to decide that it needed | a new aircraft, quite another to finance it. Part of Eastern's recovery plan is a very carefully prescribed debt/equity ' programme. That is to say, for the next ten years the j airline has to demonstrate that it can make and retain profits while servicing a heavy debt. Eastern's variable- earnings programme, under which staff salaries are tied to profits for the next five years, is part of this recovery. But Eastern still has no profits in the bank and its debt load is about as high as its bankers can accept. Taking on an extra debt through re-equipment would merely increase the capital charges and make the business of making a profit more difficult. So it wasi in the spring of 1977 that a manufacturer with no customers and an airline with no money hit on a mutually advantageous deal. That view is oversimplified and possibly a little too cynical, but the no-charge lease would probably never have happened if Eastern had been richer and Airbus had had no white-tail A300s sitting around at Toulouse and worrying potential customers. As Russ Ray puts it: "The Airbus people indicated that they understood our problems. The US manufacturers under stood, but weren't as hungry." Eastern had other reasons for not going directly into | an attempt to finance an A300 purchase. There was the | question of whether Airbus Industrie's support organisa tion could maintain high dispatch reliabihty at utilisation and frequency levels higher than any other A300 operator j was contemplating. To put it charitably, European manu facturers don't have the same sort of reputation in this area as their US counterparts. Then there was the NIH factor as it applied to passenger acceptance of the A300. Eastern wanted to know if the A300's reliability, passen- g&|gjHUQ||^g JjPPI
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