Conversation 624-024

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Well, what are you going to be doing?

Well, I'd like to be a senator.

I'm honored to be here today.

Thank you.

Did I ever tell you that Peter's been tied up to a ranch?

He's a big boy already.

Thank you.

Good day to go to California.

How do you know that?

Well, he told me about Pan Am.

And where it goes, it's over.

Or anything else you like.

The world.

That's his onion.

He started that way.

Way back.

Yeah, that was your personal pilot for a couple of weekends 25 years ago.

I used to go up to New Hampshire.

We were just out of the Naval Reserve.

You were just out of it right now.

You were just out.

I still was attested at preserving it over down at Costia.

John Bill Watts and you and I, one, two of you,

Well, Mr. President, as you know, my experience with it is that about 45 years ago, we reached a peak

Almost as old as you are, not quite that old.

And we reached a peak of earnings in 67 and we've been going steadily down now for three years.

22 million dollars deficit two years ago, 40 million last and we're trying again to beat that deficit this year.

And we're looking at a very precarious 72, 73.

So we're deeply concerned.

And we've got some good men on our board, many of them who are friends of me already.

Bob Handel, Bob Anderson, Roswell, Bill Colvin, Bill Scranton, and a number of others.

We sort of renewed the board there every day.

When I became chief executive two years ago, I was 69 years old.

We dropped it.

But when they all walked out, it was snow.

That's all we worked on.

It's contemporary.

Oh, this succeeded.

Yeah.

And...

We've had to sort of rebuild the manor.

We've had to bring in 15 new officers and two heaters.

And during that time, we've laid off about 4,500 people, about 11% of our workforce.

The last is in the last 60 days, which has been about 1,750.

So we're kind of a company under stress.

If you are aware of that, I know.

and not cutting back sooner are not scary enough for this overly competitive world with 49 airlines on the Atlantic.

And a lot of what we do, finally, is B. Johnson and his two-digit channel, who had absolutely hand up the roots to anybody

who really understand, does, does not do the same thing.

We've got a great deal of success out here.

We've got some, I mean, we've got a great deal of success out here.

We've got a great deal of success out here.

So, well, we don't know what's happening there.

Now, so, if you have the fact that you have

The number of carriers on land, about four years ago, was about half the number now.

And most of the new ones are the U.S. non-skids.

There are six of those in the world, ONA, TIA, capital and so on.

And then, because those non-skids wanted rights abroad, we in turn had an open door to the high seas.

toward their coming into here, so they're now 20 foreign non-skids with access to the United States under this open-door policy, and six U.S. non-skids across the Atlantic.

This will give you an unbelievable number.

This summer, 70% of the traffic from the West Coast to Europe went online.

And that really, yes, it used to be.

How can you run a schedule there?

How the world, how the world, or the non-schedule.

Tea, please.

That is simply the result of

awarding of these routes to the nuns at these events.

Sir, I heard you say you're an amazing man.

Sir, I thought you cheated on me.

Indeed, may I interject?

Very little, Mr. President, at the moment, because they had as good a lobby in Washington as the truckers.

They were the best.

They went up to the hill, and people were making a ton of money.

I'm not suggesting the congressman, but there was enough money being made in the industry to spend it

They made a ton of money in this, and they got legislation passed, and the Congress has said that it's the policy of the United States to have non-scheduled airlines.

And the most we can do is to consolidate them, cut them back, and do what we can, which Secor Brown is trying to do.

But unfortunately, the Congress has spoken that they want non-scheds, even though, from our point of view, it's a very questionable thing.

Well, we can question what we can do.

What can we do with the carbon tax?

It's a whole non-skip.

It's impressive.

It ought to be done.

It ought to be done for the last reason that it's not just non-skips.

It's the law of others, too.

It's the whole situation of the director.

I mean, you just have too damn many unprofitable runs.

You remember in the domestic side, you can call the other office, and it just sells you.

I'm absolutely opposed to it.

It's something you did not do with them.

The last two years, we're in a dynamic situation.

You've got to try to correct that.

I guess you're right.

That's all you can do to hold them off.

I believe so.

But I think Peter Depp's right.

The political reality is that the legislation has one hell of a lot of ideas there.

And that's the question.

But you can hold the CDC from liberalizing.

The argument, Mr. President, is that they can't enforce the current rule.

The current rule is you have to belong to a kind of a fraternal organization, an affinity group that's been in existence for six months, and anybody walks into the marine terminal somewhere and signs up, and they literally can practically do that to go abroad, and the CAB doesn't have the machinery or the money to police it, so what the

What Brown is trying to do is get a law that he can reasonably enforce.

Now, I admit that in so doing, he doesn't force them, he doesn't get them out of his business, but he does remove this continual law-breaking that just lets him run high and wide.

We think that his rule should be ever enforced.

They think, they're not scared, that the rule should be looked upon as actually non-forced.

I will tell them of your urges.

Well, the point is that I do not want to have a major international carrier, the major international carrier, run at a loss.

You can't say it won't survive.

And I don't want to see, I don't want to see Panhandler, I don't want to see any TWA player, because they'll be here a hell of a long time, and the non-skills will come and go, right?

They're awfully big, too, but if one of them has to do it, it ought to be the non-SCADs, not the SCADs.

I quite agree.

And we are...

If they've ever come a big deal... Well, I agree with you to the extent they're in.

I don't want to see any of them.

I know some of them.

Exactly.

So we should get another deal.

But my point is, I argue this very strongly here in this office on the domestic lines.

I think we've got to do it on the international lines.

And on a scheduled basis.

overall picture.

Brown's been good.

You know, he hasn't given any domestic routes where he can control this.

And he's cognizant of this problem.

We're looking out, man.

You know, this is very... Brown has said it.

He was the man to talk to about it.

We have 150,000 to 200,000 shareholders.

A lot of people thought that, man,

would be the chosen.

I've never felt that way.

I've never felt that was real.

But I do feel that we can be helped to remain the principal U.S. flag carrier competing with, on the Atlantic, the TWA and C4 World and 46 other carriers.

And they have all of the powers that are going to come out both times that are going to be fair, because they knew that the character wasn't worth subsidizing if they didn't count on the law.

There are several ways, and I'd love to go over them with Pete, in which we think we can at least arrest this vote.

Well, here's what we can do.

Go over with me, because I rely on him totally on this.

I mean, I'll check it myself.

If you go over with him and present the ways, he can bring me a little sheet on it.

I'll check it off.

All right.

But I have a line for those, sir.

But I, the general principle, we won't go over this.

You know, Mr. President, that you directed John Connolly and John Mitchell and the Transportation Envoy to watch this, and we're doing that.

However, I will do that with you, and I'll also bring it to that Congress.

Absolutely.

And John Mitchell is... No, we're not.

There's a lot of opportunity to work.

There's a danger that by the...

third quarter of next year, we would be in a very precarious position.

That's why we've been working with you here, and that's why the Pan Am-TWA merger was brought down to look at, because we thought that was one way of going.

So we didn't want this to be a surprise to anyone.

TWA came to us, as we were looking at it in this group, and said, you have to let us know by a date certain which

We sent people up to New York.

We just couldn't give them that.

They have a new president, and they would get very, I think, they'd get serious and serious.

And I have to admit that, you know, the extensions of antitrust laws that our friends can take.

Right.

The thing is, they were there.

That kind of, unfortunately, wasn't in any way.

But, you know, I heard Donnell talking about it.

I'm not sure if it's not, but he's got to get what he's talking about.

He's got to get what he's talking about.

If that isn't free, you don't think that's true?

I do think that's true.

I quite agree.

We told them, told G, but specifically told Tillinghast, that on TWA, this was not to be interpreted as a negative.

We just couldn't tell them by the 10 days after this.

The only problem is this one.

He is a world character, so are you, so it looks like.

In terms of the nasty characters, we're gutting all the nasty characters like the world.

Why the hell is there another world character like America?

It makes all the sense in the world, doesn't it?

We'll explore that.

We certainly will, but give it a while, I think.

For you, sir, is the fact that we're both...

I think we're going to have to take a hard look at these.

It's our whole world we're going to be in position to be doing other things.

It doesn't bother me at all.

It's just a hell of a career.

That, of course, would stop the legal lawyers from looking at it.

It was clear, doing the work we had done in that time, that it would be easier.

You could make arguments against, but it would be a lot easier with a domestic line, non-American or United because of their size, but one of the others, it would be easier to go that route than it would the TWA route because of the value.

Well, they're probably going to...

On American Western, Mr. President, after endless battles, we ended up with transportation going to the CAB and supporting it and justice going to the CAB and opposing it.

American Western.

On size alone,

I have a story.

Do you remember?

Well, this scared the hell out of us, incidentally, because when Justice Henry, in that case, what would they do?

Well, that's what I wonder.

I don't know.

Okay, I will.

You're going to have a side argument.

You have a stage in this one.

Yes, sir, but they've got a different problem.

They're against the whole world instead of just against our international.

The extraterritoriality of the antitrust laws.

It all has been in doubt.

Well, that's true, but it's in the law.

Domestic and foreign.

All right.

I just want to see something on that.

No, I'm not sure.

Well, I'm racing, and I want to find out.

All right.

Yes, sir.

Just a couple other quick ones.

The N.W.A., they're not losing money right now, are they?

Well, they lost $60,000 last year.

They're hoping to do better this year.

Much better.

And they have a 6.5% increase in domestic fares to help them.

And if you point that out, every country in the world has an error.

And, you know, Hamilton's not effective.

We cannot fly outside, so we don't get this.

We're going to do everything we can.

I assure you.

I'm sure we're going to find this guy.

It's not just not being able to merge.

It's that we cannot pool with a foreign flag carrier.

Just to give you an example, SAS carries 85% of the traffic between the United States and Scandinavia.

And 79 carriages have run 85% of the traffic between Belgium and the United States, even though two-thirds of the traffic is by Americans.

And the reason is that they use the ethnic argument.

They restrict and discourage and ban those markets.

And the weather is so cold and unprofitable.

Now, they cool with every other carrier on every other route.

We're not allowed to split the revenues.

During when?

That, that, I didn't, I had not the last request that you made, the request that we made.

I, I, I think those can all be, those statements are all questions that you want to say to the Air Force.

Right.

If you'll give us a proposal right now, I'll really ram right into this partisan mess.

We just want to get .

But he has nothing to do with politics.

And he also has nothing to do with the fact that I believe that this line has got to be profitable.

And I think you're going to be screwed.

That's what we have.

And you haven't.

I think that most of all, give the CAB the authority to raise these

these rates to a compensatory level, the SST refund.

You know, we fought the good fight for the FNAC.

Peter will agree we led the Air Force and supported it.

But then, when we lost the battle, you all, particularly me, helped the FNAC get their bait back that they had put in.

You got that direction?

All right.

The FNAC's lost every battle.

that would help us get through the next two years.

I understand that's being looked at with the...

Yes, sir.

The military said they've been gradually building their own airline in the Air Force.

And there's a bill up there that would make them put 40% of the commercial-type cargo in the airlines.

That is appropriate, a temporary way to help TWA Pan Am Northwest.

Now whether you should support an identity, this would become a controversial thing, whether you support legislation that says if one of these regulated transportation companies is about to go under, there should be some

Long guarantee.

Underneath it, RIC type.

That could be a murder system.

There is a bill up there for the railroads along this line.

And there's a question whether the airline should be added or not.

That bill won't go anywhere.

That is a tough article.

But if you had it, you would have had to go up there each time somebody...

uh, got into deep trouble.

On the other hand, he wouldn't want us to think we could just fall back and do a better bet.

So, it is a, it may be that we are only down the road to be cured.

We discussed it with, you know, earlier, you know, about the discussion that must have come, sir.

It's not now.

It can't be this year.

It must be where it started.

But, uh, but, it may be that the United States, in order to remain safe,

And in order to remain, for example, the railroad business that you have to subsidize the railroad line a little while, and in order to remain the international airline business, you've got to subsidize the airlines.

I'm glad that we don't have to compete.

You have to, two things you ought to say to them, and these fellows stated to them, Mr. President.

In the first place, the two of them are currently carrying, what, 45% of the transatlantic traffic, while the other 47 are splitting up the other half.

So they're doing pretty well in that competition.

We're holding our own at waist rates, so there's two of the three times, on the AXA 47 captain, the captain that was on that airplane, that was next to me.

I doubt that.

But if it's not getting $75,000, it should be $75,000.

$75,000 a month, you know, of which $48,000 of revenue produces cash.

What is the program here?

He gets about $145,000.

And they're spending $747,000.

And Lowe Thompson gets $28,000.

We don't know which one is going to get the services.

The other good thing, Mr. President, is that for the last five months, their traffic has been up each month over the same month in the previous year.

And the longer they're done, the better we can say something about the economy.

I'm going to reduce it a little bit.

Well, in response to the personal, for just a second, President, we have tried, even though I served in the administration, to support you in every way we can.

In Vietnam, we've been out and about in usual, normal relations with Peking and Cuban speeches.

I know so.

We now have two groups of poets that lie chartered, a group of law school teachers, which may appeal to the Japanese, a group of businessmen that they want to go in, but only in Japan.

in support of your trip, not to steal ahead or behind, but in support of that trip, whenever it's appropriate.

We would like to do some servicing.

We were the last American group out of the Air Force in 1949.

We had Bentley Technical Advisors, too, in China, and National Aviation Corps, CNAC.

I had a very good report with Jim.

We'd like to resume that.

I guess we think the only chance is for maybe a charter here.

Still hoping to get the press charter to support your trip.

I think we have a chance.

We would like to take in a group of businessmen.

I think we'll have a good time.

And gradually work into the U.S. flag.

We don't know yet what the...

No sir, we don't have the numbers on us.

So in front of you now, you were one of the ones in 1958 to speak to push you off of that air service.

We've been serving there now four years.

It's an unprofitable route, but...

to the United States, and we're the lifeline there, as well as all these European towns.

And we're building hotels.

And so that way, all the Soviet problems, you know, these ones, they could keep this in context.

At this point, we will, the Chinese are very tough on the number of press.

How many we get is going to be limited by the time.

I didn't very confidently expect that to be very liberal.

And so I don't, I, I think we ought to get back to that.

There'll be a hell of a press conference over there, and there'll be more than one.

We've always .

We agreed you weren't going to bring that up.

No, I did.

Oh, you did.

But I was just saying.

We may not get it.

It may not work out.

The other thing is on the U.S. Japan front, as Peter knows and Peter Peterson knows and likes to chat, we formed this group of businessmen.

David Rockefeller and I are chairmen of it, and we have been working behind the scenes on the trade relationships

trying to bring Japanese to the business community and the bond.

I think we've been helpful in that area.

I've spent maybe too much time on it.

Very important at this time, we're opening to China, at least correctly, to give the Japanese kind of loving care.

Well, I couldn't do it all the way.

We're doing it.

I've got to do a few of them.

I haven't.

I've been spending an awful lot of time on the debtors so far because they've gotten to me.

I'm not lying.

Oh, that's wrong.

It's good.

That's going to be true for a long time to come.

China has an enormous economic power and potentially a great military power.

I mean, Japan has an enormous economic power and potentially a great military power.

China today has an economic pigmy and has a growing military power for accidents that did not affect man, that did affect Japanese.

But at this time, we know the title.

We believe the Japanese are terribly important to us, and we are to them.

And we have had a few little problems.

But, you know, we're still going on.

We're still thinking about whether or not we're going to get it back to management.

And with all the barracks and the officers' clubs and the janitors and consulates, I guess I think that this is it.

The U.S.-Japanese relationship is about as important as anything we've got going on because of their sensibilities, their power, their thrust back into Southeast Asia and onto the mainland.

The Japanese side of this business council, the Japanese council and the American council, is a big one right now.

We have to realize, of course, that, too, that if you look at the pieces of this area that I've

major power centers in the world are only five.

There's the United States, there's Western Europe, 300,000.

There's the Soviet Union, there's China, and Japan.

That's it.

Nothing else matters.

Sure, Latin America is interesting.

So is Asia and the rest of Southeast Asia and India and all the rest.

But my God, they're not.

There it is.

90% of the world's production is in Australia.

And under those circumstances, there are such a Japanese

third most powerful, even out of the country in the world today, they'll be second.

Or, they'll certainly be second in 15 years.

And they could be first in 25 years.

And all they have to do is reach out, and they get more of a journey to bring them back into the home planet.

And they get stronger and bigger in time.

And they're very powerful.

And your policy, your economic policy, has, for the first time, told us we're going to be on our reciprocal basis.

It is going to be a continuum of orchestration, but it's on the far-reaching policy front.

And it's what we're going to do on our U.S. demand.

Well, we, our team, we feel we need stronger representation there.

We can help penetrate the travel area.

We've spent a lot of time on it and we want it to be helpful to make sure you ban China from Russia.

That's your service.

Well, I guess we should have an SSG.

Yes, sir.

We can't afford it by now.

That's the best thing that no one else wants.

I'm not saying that the U.S. will have the right to Russia.

I heard you're sure this is true.