Sabre

“It may have been one of the more meaningful conversations on an airplane ever because of the way it affected virtually everything here in the modern world because it didn’t take [the Smiths] long to realize that what IBM was doing … back in 1953, [was] just what an airline reservation system needed to be able to do.”

“…The airline industry, including American Airlines, can’t afford to operate 5 million dollar airplanes without reservations”

“….The reservations function couldn’t keep up with the jet aircraft size and speed. In some cases, a jet could depart and arrive at its destination before the reservations system could adjust to the inventory.”

“We had very dedicated people both at IBM and at American Airlines. Real good guys. Men and women, by the way. It was tough. The disk file that we wanted for Sabre was being developed at IBM, San Jose. They said … we should go with this small file—I forget the number of the thing. I said, ‘Wait a minute! For the records we want American to keep, I will have forty of those files in one room, and the maintenance of them is such that some will be down at any given moment. Not acceptable.’”

“No-show was a huge problem with the airlines then. They thought they had the tickets sold, but people just didn’t show at the gate. So they would fly with empty seats, and you lost money when you fly an empty seat. It turned out in a study that 80% of the no-shows were the fault of the airlines’ bookkeeping problems. Not just on American, but all of them. Obviously, we should be able to eliminate most, if not all, of that.”

“Well, in selling Sabre to American both finance and sales had agreed that it would save them some money, but they were arguing over how much. Three months went by, and here I’m sitting with a couple hundred people—I don’t know how many—but all working. Vin Learson, my group executive, called me in and he said, ‘Either this is going to sell or not. And we can put those people to work somewhere else.’ I was scared he was going to break up my group. … When I found out that the finance and sales people in American [Airlines] both agreed Sabre would save money, but were arguing for three months over how much, I had to see C. R. Smith [Chairman, American Airlines] without offending any of his Vice Presidents.”

“I had learned that C. R. had coffee in a stand-up coffee shop in the bottom of the building where American had offices. I started going to that coffee shop at 5 p.m. every day, and I’d stand at the counter, drink a cup of coffee and wait. If 6 o’clock came and no C. R. Smith, I’d go home. One night he came in. I’d only waited a couple of evenings for him. ‘Blair! What are you doing here?’ I said, ‘Oh, just having a cup of coffee!’ And of course, we got to talking. Finally, I said, ‘C. R., your financial people and your sales people have been arguing for three months over how much money Sabre will save American Airlines. Both sides agree it will save them money; it’s a question of how much. In the meantime, whatever those savings are, American has lost three months of them, and I’ve lost three months of revenue for the IBM company, so don’t you think it’s time for you to fish or cut bait?’ He got red in the face, changed the subject, and pretty soon left.”

“I thought I was in trouble because he was a friend of Tom Watson Jr. and he would call Tom up and say ‘Who’s this young whipper-snapper you’ve got telling me how to run my blankety-blank airlines?’ I went back to the office—it was only about 5:30, and Vin Learson was still there. I said, ‘Vin, Tom Watson could be getting a call from C. R. Smith any minute, and Tom could blow his top. And here’s the story.’ Vin, although he was known as a tough executive, was also a human being. In fact, he’d chew you out, but after he finished chewing you out, he’d help you solve the problem that caused the chewing out in the first place.”

“So I was ready. Man, I didn’t know whether I was leaving by the window on the 15th floor, or the elevator. He stroked his chin, and he said, ‘No, Blair. I’ve heard that C. R. Smith, when he has differences in his top management, waits for a catalyst. I think you’ve just been that catalyst. This is Friday, you go home and have a good weekend.’ Well, I could have hugged that guy! Monday morning I got a call … saying [IBM] wanted to write a letter of intent for Sabre. And would I come down and help.”

“We had to plow new ground in the contract. So I said, ‘C. R. Smith shook hands with me after I got that letter of intent. He went out to Boeing and ordered new Boeing jets, and he shook hands with Bill Allen, the President or Chairman of Boeing, for $300 million worth. Now, you mean to tell me, I’m going to take this back and say “Sorry, I love your handshake, but I need so-and-so.”?’ And I stomped out of the office. I found out Learson told them it was going to be done Blair’s way, and it worked, we got the contract.”