The president of McDonnel Douglas Corp. told stockholders today that the company soon will slow the rate of production for its DC10 jumbo jet in response to a reduction in orders that followed a crash in Chicago last May 25.
The accident, the nation's worst ever, killed 273 people. "At least some sales have been lost because of Chicago and its aftermath," Sanford N. McDonnell said.
McDonnell's statement at the corporation's annual meeting here was the most straightforward admission by a senior company official that the crash, the publicity that followed it and the 38-day grounding of the jumbo by the Federal Aviation Administration had hurt the company.
McDonnell said that in the year ending March 31, McDonnell Douglas had received 26 firm orders for new DC10s. In the previous 12 months, there had been 42 orders. There would have been some reduction in any event because of harder times for airlines generally. McDonnell said.
His speech was interrupted only once for applause, and that was when he said that people who hesitate to fly in a DC10 "have been misled, as we have been maligned by people and media who filled the atmosphere with so much falsehood that the truth when it finally emerged, was scarcely recognized."
The Federal Aviation Administration, in a special study, and the National Transportation Safety Board found the DC10 to be a sound airplane and the Chicago crash to be the result of maintenance-induced damage, not of weakness in design.
American Airlines Flight 191 crashed almost immediately after taking off from O'hare International Airport. The engine under the left wing and the engine-support pylon fell off just as the plane's nose wheel was lifting from the ground. Vital controls and pilot-warning systems were ripped lose with the pylon. The pylon failed because of a crack that investigators believed was caused during heavy maintenance on the plane at American Airlines' Tulsa base.
In addition to slowing the production line, the McDonnell Douglas annual report said that the corporation has decided not to proceed "at this time" with a stretched version of the DC10.
George Sloan, planning director for McDonnell Douglas, said in an interview that "if there were orders (for the stretch), we'd build it. We have a special problem on the DC10," he said. "This is indisputable."
A total of 352 Dc10s have been sold in its 10-year history, leaving the plane 48 units short of showing a profit.
The bad news about the DC10 tended to overshadow the good news about McDonnell Douglas as a whole. The corporation had record earnings, a record backlog of orders and record sales of $5.4 billion in 1979.
About 60 percent of those sales were from military of government contracts, and planner Sloan spoke confidently of the future of the military side of the house with the return of the Cold War tensions and increased Carter administration interest in defense spending. A military version of the DC10 -- the KC10 tanker -- is just beginning to come off the production line and could be a big boost for what is essentially a commercial aviation program.
But first-quarter earnings were $43.4 million ($1.10 a share fully diluted) compared with $45.4 million ($1.16) during the first quarter of 1979. although sales increased to $1.424 billion from $1.360 billion a year earlier. The latest quarter's earnings included a one-time gain of $15.5 million (39 cents) from a real estate transaction.
The aircraft maker's firm backlog rose to $6.773 billion at the end of March from $6.165 billion a year earlier.
The adverse quarterly report was attributed to high start-up and production costs for the DC9-Super 80, McDonnell Douglas' entrant into the next generation of quieter, more efficient aircraft, and a write-off of anticipated rising costs in the DC10-KV10 program because of the slower rate of production.
A boost for McDonnell Douglas came April 10 when its F18A Hornet fighter was named the winner of a big Canadian military contract.
Many McDonnell Douglas employes, who own about 20 percent of the stock in the corporation, attended the meeting. Automobiles in the company parking lot bear bumper stickers stating "I am proud of the DC10."
"If justice makes a difference in such matters, the DC10 program still has a bright future ahead of it," McDonnell said.