The former head of Braniff Inc., who piloted the airline through bankruptcy court seven years ago, blamed changes by subsequent management for landing the company back in Chapter 11.
"You could see it coming," Howard D. Putnam, Bran-iff's former chief executive, said in an interview Thursday."They took on a lot of debt," he said. "They began a gigantic expansion in Kansas City, and they began to lose money. They had been known as a low-fare airline and became a high-fare airline. They got out of their niche."
Putnam said he tried to remake Braniff in the style of Southwest Airlines Co., a Dallas airline he led as president. Southwest stressed high employee productivity, high utilization of planes, low fares and high-quality service.
Braniff handled the charter flights between Salt Lake City and Los Angeles and San Francisco for locally based Morris Air Service. But upon hearing of the impending bankruptcy, Morris Air quickly arranged to have Amer-icaWest and Continental airlines handle the charter flights until a contract with another charter service is signed.
Chicago businessman and hotelier Jay Pritzker bought Braniff in 1983 as it was emerging from bankruptcy court and altered that strategy, Putnam said. Pritzker sold the Orlando, Fla.-based airline in 1988 to investors led by Jeffrey Chodorow of Philadelphia.
"They in turn brought in new senior management," Putnam said. "Some of the management were from Piedmont (Airlines), which is in a different part of the country with little competition and higher rates.
"They had first class, and it seems logical, I'm assuming, to management that since it worked back there it should work for Braniff," he said.
But Braniff early Thursday filed for protection from creditors under federal brankruptcy laws, off 2,700 employees and sharply reduced its flying schedule.
The airline said that while it believes assets have "substantial value," it was suffering a liquidity problem because of delays in completing recently announced financing and a dropoff in airline traffic in recent months.
Putnam, who was in town to address University of Pittsburgh graduate business students on ethics, said Braniff now must "restructure their way out of it."
"The saddest part about Braniff is the employees," Putnam said. "When we reorganized, the employees took wage cuts of 40 to 50 percent for five years in order for the company to come back. They've done their part."
Upon filing under Chapter 11 in May 1982, Braniff suspended operations, laying off about 10,000 employees and leaving only 225 on the job, he said. Within two weeks, the company also laid off 22 vice presidents and eliminated two levels of management.
A bankruptcy judge gave the company permission to dissolve its labor contracts and seek concessions from workers. Putnam said the pay cuts were easier to achieve because the employees were laid off.
"I had no problems with that ethically . . . because we were already in (Chapter) 11 and the only way we could come out is if we had some more productive labor rates," he said.
"I got them to understand that I was their last hope," Putnam added. "I didn't tell them I was going to cut their salaries any more. I just said we needed more productivity."