AVIATION: Prospective Merger

Simmering on the financial stove last week was one of the biggest airline mergers in U.S. aviation history: sprawling, 16-year-old Northwest Airlines and fledgling, compact Mid-Continent Airlines. As a single unit the two lines would have 22,000 daily flight miles radiating from Minneapolis-St. Paul (giant American Airlines has over 90,000 miles), a man-sized fleet of big transport planes and more than 5,000 employes. Besides, it would have a strategic “X” route—major lines running north-south and eastwest.

Already approved by the directors of both companies, the merger must await approval by stockholders and the CAB. But if everything goes well, two hard-flying airlines will be united:

Northwest was started in 1926 by the late Charles D. Dickinson, a red-faced, white-whiskered eccentric who made a fortune in the seed business, was affectionately called “Pop” and “Santa Claus” by airmen because he spent the last years of his life and much of his fortune angeling flying ventures. Aviation Bug Dickinson toyed with Northwest for a spell, lost so much money he turned it over to a group of Minneapolis-St. Paul-Chicago financiers. They did better: in 1927 Northwest had a prosperous Twin Cities-Chicago run, in 1928 spread to Winnipeg. Then Northwest picked up tough-minded, fast-moving Croil Hunter, a World War I artillery captain who went from traffic manager to president in five years.

With Expansionist Hunter in the pilot’s seat, Northwest pushed westward to Seattle and Portland, hiked gross revenues threefold to $5,000,000, lifted profits from zero to over $400,000. Meanwhile Hunter made a long survey flight to Alaska, followed it with a CAB petition for a commercial route to Fairbanks, others to New York City and Washington. But the war froze these petitions in their pigeonholes, forced Airman Hunter to look for something else. He found it in a big Army contract to fly anything & everything from Minneapolis to Alaska.

Northwest did a bang-up job. Even veteran Army flyers like to talk about how the line set up a complete route to Alaska, carried standout cargoes like: 1) a complete sawmill for Alaska Highway use; 2) an oversized six-wheel truck which was cut up by torch, crammed into the plane, put together at the destination by six welders who flew along.

Mid-Continent began as a pip-squeak Minnesota-Dakota mail carrier, got nowhere until 1936 when rich Thomas Fortune Ryan III bought a big block of the common stock. Ambitious Tom Ryan started romping all over the place, wound up with 6,700 flight miles from Minneapolis (Northwest’s home plate) to Huron, S.C., to Tulsa and to St. Louis. Then he applied for routes to New Orleans, other points.

But war hit Mid-Continent two hard blows: 1) it took seven of the line’s nine civilian planes; 2) it sent dynamic Tom Ryan to Australia as an Air Corps major. Only offset was a military route from St. Louis to Wright Field. Thus when Croil Hunter dangled his merger proposal, Mid-Continent grabbed at the chance.

The Hitch. Sense-making to Mid-Continent and Northwest, the merger may nevertheless wait a long time for CAB approval. Reason: CAB has frozen all major route applications for the duration, would probably ice a merger too. But canny Hunter can afford to wait—when & if he gets Mid-Continent and the proposed routes he will have a vast air net stretching from Washington to Alaska and from New Orleans to Winnipeg.