Airliners Rest in Desert, Awaiting Better Times : Aviation: Recession and bankruptcies have grounded these giants of the skies. If they aren’t rescued, they could end up as aluminum ingots.
This is the aviation industry’s Forest Lawn. It is a scrubby desert lot strewn with unwanted airliners, grounded by the industry’s economic woes. Tick off the names on the fuselages; it sounds like roll call at bankruptcy court: Pan Am. Eastern. Braniff. Midway.
The place is called Pinal Air Park. In the 1970s, the county-owned airstrip 35 miles west of Tucson was a secret air base for the Central Intelligence Agency. Twelve years ago, the CIA got out of airlines and sold the lease to a company with an idea as bland as the landscape. Where others saw only desert, Evergreen International Aviation envisioned an enormous parking lot.
This is pretty dull stuff for Evergreen, a company that made its name fighting forest fires from helicopters and running rescue missions in El Salvador for the State Department.
It is good business, though. With the travel industry in a recession, sick airlines are dumping aircraft. Some airlines have folded, leaving hapless creditors with entire fleets to unload.
Bad news is good news to Dave Fowler, an Evergreen executive who runs what may be the quintessential counter-cyclical business. The airlines are laying off workers by the hundreds, but Fowler is hiring. “We need mechanics to keep up with the work.”
In a blue shirt and a red tie, Fowler doesn’t look like an undertaker. He sounds like one, though.
Spewing euphemisms, Fowler explains Evergreen’s mission: “It is a service that we sell. If the need arises, we sell a service.” He pauses, selecting this analogy: “It is the same as selling funeral plots.”
A quick tour of Pinal Air Park suggests that the need for Fowler’s services is on the upswing. On this particular day in March, 75 aircraft dot the desert lot.
Tucked away in a far corner are the mainstays: eight seaplanes owned by Merv Griffin’s Resorts International. They’ve been here four years.
Dwarfing the tiny seaplanes are eight Air Canada L-1011s that arrived a few months ago. A coat of whitewash covers the Air Canada on each fuselage. “It’s an image thing,” Fowler confides. “A lot of airlines don’t like the public to see their planes here.”
Over in Pinal’s observation tower, a security guard is checking the horizon for the arrival of No. 76, a Midway 737. It is owned by German investors with no use for it now that money-losing Midway can’t afford it anymore.
The Midway jetliner is running behind schedule (like lease payments on some of the planes here), but Fowler is confident that it will show up. He doesn’t give it too much thought; the main event on this particular day is taking place on the ground.
Armed with industrial-strength tape and aluminum foil, workers methodically entomb six newly arrived Eastern 727s. Ground crews tape down doors and wing flaps and jam plastic plugs into engine casings to keep out pesky ants and birds.
The Eastern jetliners belong to Boeing Corp., the Seattle aircraft maker that sold them to Eastern. Boeing got the jets back in Eastern’s bankruptcy liquidation.
The Eastern jets will be stored here until Boeing can find an airline that wants to buy or lease them. If no customer is found, the jets may be broken up for their parts and ultimately melted down into aluminum ingots. “They become your kitchen pots and pans,” Fowler says, chuckling.
The folks at Pinal try to make their customers feel wanted at--if you will--this most unwanted time: At the air base entrance, a Holiday Inn-type sign boldly proclaims: “WELCOME TO THE BOEING COMPANY.” Pinal even has a small motel where customers can stay while they look over maintenance reports and check other paperwork.
There is good reason to dust off the welcome mat, especially in this case: Eastern had 170 aircraft. The significance of this is not lost on Fowler. “That whole fleet has to go somewhere.”
Barring Eastern-size disasters, it is rare for a manufacturer such as Boeing to park planes. Fowler reckons that 60 or so of the jets on his lot belong to investors, banks or insurance companies that forked over billions of dollars to finance aircraft purchases through the 1980s. The others belong to the airlines themselves.
In the late 1970s and 1980s, the industry was growing. Now the airline industry is in a downturn, and financiers are groping for the rip cord.
Industry newsletters are jammed with ads that read like desperate personals: “5 727-200 ADV, 1975, EX-AIR CANADA, AVAIL. NOW,” or “1 L-1011-50, 1974, EX-TWA, AVAIL. 30 DAYS,” or “2 MD-80, 1989, SALE/LEASE AVAIL. NOW.”
Places such as Pinal Air Park are filling up because so few buyers are AVAIL. NOW. Since December, the number of aircraft stored at Pinal has jumped 50%. Federal Express Aviation Services tracks the number of aircraft up for grabs. It says there are about 800 jetliners for sale or lease, up from 486 in July, before the travel industry malaise that followed Iraq’s Aug. 2 invasion of Kuwait.
And many in the aircraft business believe that the situation is going to get worse.
Philip Beck runs a parking lot for used airliners in Las Vegas that competes with Pinal Air Park. He has 35 jetliners on his lot dropped off by leasing companies.
Beck says leases on hundreds of aircraft are due to expire during the next few years, and many of those airliners will end up on parking lots. Many of them will be older 737s and 727s or DC-9s and DC-8s that are quickly becoming technological dinosaurs. The older airliners run fine, but they are too loud to meet government noise restrictions. And their older engines aren’t very efficient; they gobble up too much jet fuel.
It’s possible to modify older aircraft to make them more efficient, but airlines won’t spend the money if the economy is bad.
Industry executives are quick to point out that not every parked jetliner is headed for the scrap pile.
After all, a new user was found for eight ex-Braniff jets parked at Pinal. And Beck says one leasing company took 20 aircraft off his lot recently in one great swoop. Such transactions are rare, though.
Today’s glut is nothing compared to what might have been. Fowler sensed big trouble for the airlines--and a very big opportunity for Evergreen--last October, when the Persian Gulf crisis drove fuel costs through the ozone layer.
Bringing together his six-person marketing staff, Fowler told them to step up the cold calls. Under his orders, Fowler’s marketing mavens also produced a slick, color brochure that described Evergreen’s services and contained aerial shots of the desert lot. Five hundred brochures were mailed to finance companies, leasing companies, aircraft manufacturers and airlines all over the world.
Evergreen doesn’t take in too much in parking fees--between $250 and $1,000 a month, depending on aircraft type. The big money is in add-ons. A paint job for a 727-100 ready to go to a new owner can cost up to $100,000. Engine work can run into the tens of thousands of dollars.
The brochures boasted that Evergreen’s mechanics could do it all. The results were disappointing, nonetheless. Fowler doesn’t blame his staff; those darn jet fuel prices fell without warning. Relieved of the huge fuel costs, carriers are finding it easier to make lease payments.
“I thought for sure we’d have 275 planes by this time,” laments Fowler as he surveys the wide, empty spaces of a lot that can hold at least 450 jetliners. “At the very least, I thought we’d have 250.”
Given the airline industry’s shaky condition, Fowler predicts busy times ahead. This much is certain: If Pan Am shuts down, Pinal will get at least six of Pan Am’s 747s. That is because Evergreen’s leasing company owns them.
Aircraft Availability The turmoil in the airline industry has created a glut of availabel aircraft as carriers have grounded planes to cope with the drop in passengers because of the recession and Gulf War. Iraq invades Kuwait Continental Airlines files for Chapter 11 Eastern Airlines begins liquidation Pan Am files for Chapter 11 Eastern’s aircraft put on the market Midway Airlines files for Chapter 11 Source: Commercial Aviation Report, Federal Express Aviation Services
