McDonnell Douglas joined a cash-poor airliner maker with a military jet specialist
By 1967 Douglas Aircraft had order books full of airliners yet was reckoned to be under a year from bankruptcy, with its jets months behind schedule. McDonnell, a fighter maker with almost no civilian business, needed steady income for peacetime. Their marriage produced the F-15, the DC-10 and eventually a takeover by Boeing.
The founders had a lot in common. James McDonnell and Donald Douglas were both of Scottish descent, both MIT graduates and both veterans of the Glenn L. Martin Company. Douglas launched his firm in Los Angeles in 1920. McDonnell's first venture, a family aircraft maker in Milwaukee founded in 1926, collapsed in the Depression, and he tried again in 1938 near St. Louis. During the Second World War Douglas built about 10,000 C-47 transports and employed 160,000 people.
Postwar, each carved a niche. Douglas produced the tough little Skyhawk attack jet, used by the Navy for nearly 50 years, and its experimental Skyrocket became the first aircraft to reach twice the speed of sound in 1953. McDonnell grew into a major fighter supplier with the Banshee and the F-4 Phantom II and won big shares of NASA's Mercury and Gemini programmes. The merger became official on 28 April 1967, with military contracts easing Douglas's cash crunch and airliner sales cushioning McDonnell.
The combined company built the F-15 Eagle, the F/A-18 Hornet, the DC-10 and the MD-80, and in 1984 bought Hughes Helicopters for $470 million, gaining the AH-64 Apache. Troubles mounted, though. A 1989 reorganisation cut 5,000 management posts, and staff joked that its acronym meant Time to Quit and Move to Seattle, home of Boeing. The Navy's A-12 stealth attack plane was cancelled in 1991, prompting litigation that dragged on until 2014 and 5,600 layoffs. Singapore Airlines dropped an order for 20 MD-11s that year because the jet lacked the range to reach Paris against winter headwinds.
As Cold War budgets shrank and it lost key fighter competitions, employment fell from 132,500 in mid-1990 to about 87,400 by late 1992. A proposed double-deck MD-12 was widely viewed as a public-relations gesture. In 1997 the company merged into Boeing.
Source: McDonnell Douglas
