Hard Landing (67 page)

Pan Am, Plaskett thought, was going to make it.

In the labor wars that had raged for years at Pan Am Capt. James MacQuarrie of the Air Line Pilots Association was a voice of reason among the union leadership. It was he who had
led the pilots off the job in 1985, forcing Pan Am to sell the Pacific—but he had also brought them back to work quickly. MacQuarrie appreciated grandeur and tradition. He lovingly maintained a 200-year-old home in New Hampshire. He tinkered with vintage automobiles. No one in labor or management cared more deeply about the survival of Pan Am, which made it all the more ironic that MacQuarrie, age 55, happened to be the captain of Pan Am Flight 103 departing Heathrow Airport for New York four days before Christmas in 1988.

Flight 103 that day bore evidence of the comeback for which Plaskett had been so desperately working. For one, the 747 jet, christened
Clipper Maid of the Seas
, had 259 people aboard—a healthy load, with plenty of the high-class travelers Plaskett was trying to woo back. There was a U.S. Justice Department lawyer, returning from a Nazi-hunting mission in Austria; a high-ranking government official from the newly established African state of Namibia; an engineer who had served as the sound man for the rock group Pink Floyd; five officials of the Central Intelligence Agency.

Its passenger compartment loaded with Christmas gifts and luggage, the plane was topped off with fuel for the long trip into the headwinds of the jet stream. At 6:25
P.M.
MacQuarrie taxied to his runway and took off to the north, toward Scotland. There, heading toward 31,000 feet, Flight 103 banked to the west to make a straight shot over Scotland toward Kennedy Airport.

It was after two in the afternoon in New York. Plaskett was nearly ready to leave the office for the holidays when Pan Am’s senior vice president of operations rang him on the phone. An air traffic controller in Scotland had reported that Flight 103 had disappeared from his screen—actually, that the dot had broken into five dots, each of which had quickly evaporated. At the same instant an earthquake had registered on the Richter scale in Scotland, with the epicenter at the village of Lockerbie.

“Why, God,” Plaskett said.

What had registered as an earthquake was actually the impact of the
Clipper Maid of the Seas
striking the earth. Eleven citizens of Lockerbie were also killed.

There has never, of course, been an airplane disaster that was not shocking, not tragic in the extreme. But never before this one had the carnage been so horrific. Some victims were vaporized in the midair explosion. Other passengers, falling for miles, their clothes and skin torn from their bodies by the friction of the rushing air, struck the rain-softened fields of Lockerbie and sank inches into the ground. It was like Bosch’s vision of hell, such was the combination of horror and surrealism.

At JFK relatives arriving to meet their loved ones collapsed in anguish. In the Pan Am building
cries of sorrow rang through the hallways. And then, on the reservations line, there was silence. In a matter of hours the airline lost half its transatlantic bookings. In the days ahead more reservations disappeared. Nearly a half-billion dollars’ worth of business went away, and there were no new reservations to replace them.

The public was quickly forgiving of most aviation disasters, but not this one. This was a terrorist bombing, executed with cold-blooded, pinpoint precision. There was nothing random about it; it was plainly an anti-American act. Suddenly anyone contemplating an international flight on Pan Am—Pan Am, that symbol of American
influence across the globe—found himself weighing the odds of survival en route.

Tom Plaskett knew the war was over. His job now, his new job, was to obtain the most favorable terms possible for the surrender. Within barely a month of Lockerbie, Plaskett stood up at an aviation conference in New York and acknowledged what everyone in the world already knew: Pan Am had to be sold or merged. One way or another Pan Am, Plaskett declared, was officially for sale.

Practically overnight Plaskett’s enthusiasm, his I’m-a-believer rhetoric, had been drained away. Much of what he saw elsewhere in the airline industry now filled him with resentment and outrage—including some of the innovations for which he himself had once claimed a measure of credit, such as frequent-flier programs and sophisticated computer reservations systems.

“It
used to be enough just to be a megacarrier,” he would later tell an audience, “but not anymore. Now,” he went on,

you have to be a
global
megacarrier to really be taken seriously. If you and your equity partners or marketing partners or code-sharing partners or commuter partners don’t have stations in Perth and Peoria, in Beijing and Bangor, in São Paulo and Santa Fe, in Hamburg and Hannibal—along with a global computer reservations system to tie it all together and control your capacity, manage your yield, add up your frequent-flier miles … well, then, buddy, you just don’t count anymore.

But Plaskett had his pride. If Pan Am was going to be sold, it would be in one piece. There would be no liquidation, no death by inches, no selling of assets and leaving the people behind without jobs. There were careers at stake—livelihoods, families. Two hundred and seventy lives had been lost during Plaskett’s tenure; he refused to be responsible for the loss of 24,000 jobs as well.

Selling a company was rarely the path to heroism in corporate America, but in Pan Am’s case it was the best anyone could hope for. Tom Plaskett still had a chance to be the hero.

CHAPTER 17

THE GILDED COCKPIT

T
he men of commercial aviation were sometimes like actors in a long-running soap opera. From time to time one of them would disappear, only to reemerge in a new role. From one incarnation to the next their roles often grew more fantastic. Marty Shugrue, to pick just one example, had been kicked out of Pan Am, only to become the president of Continental Airlines. In barely a year’s time he was removed from that position by Frank Lorenzo, who in turn was soon ousted from Eastern. The trustee subsequently appointed to manage Eastern in bankruptcy—to deal away its many pieces to the surviving airlines of America—was Marty Shugrue.

In the late 1980s one of the biggest roles in the industry was still not cast: the position of chairman, president, and chief executive officer of United Airlines.

Perhaps never before had an executive search been more crucial or challenging to a major company. United needed a builder as well as a liquidator, someone to reclaim United’s lost glory while disposing of the last remnants of Allegis; a healer as well as a battler, who could repair the fissures within United while regaining the ground lost to American and other airlines.

In searching for candidates, interim chairman Frank Olson was vitally concerned with the company’s need to cast an audience
pleaser, someone who could enrapture United’s skeptical employees. If the firing of Ferris was not sufficient proof, then the fates of Frank Borman and Ed Acker had been: in an industry demanding so many financial sacrifices, the workers would have some say-so over who held the leading roles.

Olson’s first recruiting call had gone to his close friend Colin Marshall, whom Olson viewed as the most qualified man in the world to lead United, taking account of United’s delicate culture. “
Could I interest you in returning to the United States and becoming chief executive officer of United Airlines?” Olson asked. Marshall thanked Olson but said, “No. I’m committed.”

Olson had to go to his fallback position: to recruit the man whom he considered simply the most qualified CEO, regardless of suitability to the culture of United. That was Bob Crandall.

Part of
Olson’s motivation in approaching Crandall involved the obvious benefit to United of eliminating Crandall as a competitor. Crandall was judged to be so essential to American’s success that plucking him from the company would be like removing the general from an army whose next officer was a lieutenant. But that was the smaller part of it. Olson principally was awed by Crandall’s achievements and abilities. Having no illusions about Crandall’s intense and abrasive personal manner, Olson
wrestled with the question of whether United could tolerate Fang; he was anxious enough about the risks that he asked the United board for
its blessing to approach Crandall. The board assented. Crandall would be asked to name his price.

Crandall was such a workaholic—and so relished victory as its own reward—that people sometimes failed to recognize that he also
cared deeply about his personal wealth. The talks between the two men culminated over a dinner in the Carlton House in New York, where American owned an apartment. Olson was sure he had Crandall on his hook when the two men came to terms on a signing bonus
exceeding $12 million.

But the job switch of the decade was not to be. Maurice
Segall, the chairman of Zayre Corporation, who served as chairman of the compensation committee on American’s board, proposed to bind Crandall to American with a set of
golden handcuffs. Crandall was granted 355,000 shares of American stock, with a guarantee that if
the share price fell below $33.20 the company would make up the difference in cash. It was, essentially, a put option worth a minimum of $11.8 million, but Crandall would become vested in the shares only at the rate of 12 percent a year. In order to receive the entire award, he would have to remain at American until January 1,1996, when he would be 60 years old.

The counteroffer from American was
less money, by Crandall’s reckoning, than the bonus United had put on the table, but he accepted it anyway. “I
thought very seriously about it,” he would say of Olson’s offer. “But I thought it would be very difficult to transfer my allegiance [from American]. I’d been here a long time.”

Disappointed and eager to restore his full attention to Hertz, Olson threw the search for a new United chairman back into the lap of fellow board member Neil Armstrong. They would go the conventional route of using an
executive-search consultant. But, really, how many candidates existed for the job of saving United from Bob Crandall?

Few executives in aviation had played a greater diversity of roles than Stephen Wolf. Fifteen years at American, followed by one at Pan Am—followed by a traumatic year under Frank Lorenzo as the president of Continental. Wolf always refused to discuss publicly his departure on the eve of Continental’s Chapter 11 filing, other than to call the entire situation “
very unusual,” a phrase that he often used to describe something unpleasant. Wolf’s silence about his forced ouster helped preserve his anti-Lorenzo aura, perpetuating the impression that he had resigned out of protest over Lorenzo’s plans to ditch the union contracts.
Wolf was lionized in labor circles, helping to launch him on a spectacular—and lucrative—career odyssey.

In early 1984 Wolf landed as president of Republic Airlines in Minneapolis, the 10th largest airline in the country and a failure waiting to happen. Formed by haphazardly stitching together three regional airlines after deregulation, Republic, amazingly, served more cities than any other airline in the United States. “An
unusual
route structure, to say the least,” Wolf would comment. Republic’s marketing innovations at one point, in 1982, included a free ticket in exchange for
five box tops from Chex cereal. Its logo was a blue goose. More significantly its employees had not yet been put through
the wringer of wage concessions. Wolf thought it would
not look proper to be sucking a huge cash salary from so troubled a company, so instead he negotiated for options to buy
95,000 shares of Republic stock. Stock options by contrast were “
tasteful,” as he would later put it. Wolf determined to make something of Republic.

Wolf’s ideas, and his sincere if aloof manner, went over well with employees. “I can’t put my finger on it, but Wolf seemed to
hit it off better with us than other Republic executives,” one pilot official said. A trade magazine marveled at how in a time of such industry strife, “the employees of Republic appear to have welcomed him
into their fold.” With scarcely any of the turmoil afflicting other airlines, Wolf clinched the needed concessions by trading company stock for wage cuts.

Consumed, as he had been at Continental, with all things pertaining to appearance and design, Wolf laid to rest the blue goose logo and emblazoned the Republic name across his airplanes in letters more than a yard high. He redrew the route map, making Republic a powerhouse in hub cities where it faced only a single competitor. Analysts began recommending purchase of Republic’s shares, from which everyone had once fled. The stock price soared, and with it the value of Wolf’s options. Soon came Republic’s first profits in five years, and then record profits and a still higher stock price—and then, in 1985, the United strike. Although American was the biggest winner overall from the United strike, no carrier reaped a greater windfall relative to its size than Republic. Its planes packed, its fares holding strong, Republic, though at the bottom of the airline industry’s Top 10 list, recorded the second highest profits in the airline industry in 1985.