Douglas was having its problems delivering aircraft, with a bloated sales book of DC-9s and DC-8s expanding production line and the drain on the resources caused by the Vietnam War. The company could not train people or obtain materials to deliver aircraft to its planned schedule. This was the egg killing the golden goose. Donald Douglas felt that with a little help from the banks, he could pull the company from its problems. The banks were nervous.
James McDonnell, an old friend of Donald Douglas, made an offer for the purchase of the Douglas Aircraft Company, which the banks urged Douglas to take. Donald Douglas felt betrayed but accepted the deal, and the McDonnell Douglas Corporation was born, with the St. Louis McDonnell Group in power. So, at the end of 1967, we were in a position to straighten out the problems and compete.
The DC-8 Stretched aircraft were selling as well as the DC-9s. A crucial decision was coming up regarding the DC-8 program. Like the DC-9 decision at United, a decision at Pan Am was coming up that was as critical in impact and far reaching.
A purchase of the DC-8-63 by Pan Am would have started a snow-ball effect that would virtually put Boeing out of the large Jet business, and put Douglas in the strong position they had in the Propeller days.
With the DC-8-61, Douglas had an aircraft that Boeing could not match. The reason being that the 707 was built too low to the ground and could not be stretched to meet the economic advantages of the DC-8. Pan Am was about to make this critical decision; the wrong people.
Boeing had just lost the C-5 Military Freighter competition to Lockheed and were in a pickle with the non-competitive 707 with the Pan Am decision coming up. The one advantage was the relationship that Boeing had with the Pan Am Management. I could not tell you how it came about, but my guess goes like this.
Juan Tripp, Founder, began Pan Am with flying boats with initial operations to the Caribbean. As he expanded to the Pacific and Atlantic, he needed long-range flying boats. These were developed between Boeing and Pan Am, and that relationship continued when Boeing developed the Stratocruiser, which proved to be a failure because of the engines.
Pan Am purchased Douglas equipment as they were the most successful aircraft in operation through the DC-7C. When the Jet Age arrived, Pan Am purchased both Boeing and Douglas aircraft, not because they were fond of Douglas, but to protect themselves from another Boeing flop and the ability to study both aircraft under operation.
Because of a slight initial advantage, Pan Am selected the Boeing-707 as their mainstream aircraft and relegated the DC-8's to South America and Africa in lieu of the Atlantic and Pacific, and ultimate disposal. No one thought to ask which would be the better aircraft when stretched.
Boeing, through previous political muscle or whatever they had, promoted at Pan Am the development of the 747 from the Freighter competition aircraft. This aircraft had twice as many seats as the DC-8 and justification for an aircraft of this size was very difficult, if not unrealistic.
The ego of Juan Tripp and Boeing's relationship with the top management of several regulated airlines paid off again. Pan Am purchased the 747. All the airlines that competed with Pan Am had to follow, and the potential boom for the DC-8 collapsed and never recovered from this decision. Neither did Pan Am, as over time the 747 was the demise of the airline along with several other stupid moves which assisted in its downfall.
I felt bad for the Douglas Salesman. He paid for the past relationship Douglas had with Pan Am and the lack of political clout. If he would have won, that airline could have been a major factor today.