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THE MERLIN/METRO STORY (PART 2)
Staying alive in the face of economic disaster.

The early years of the Merlin/Metro story make for happy reading (see World Aircraft Sales Magazine digital version- March Issue- p90). However- as we moved into the 1970s- potential disaster loomed as the storm clouds gathered on the horizon- and recession threatened.

The worldwide economic recession that had begun in 1970 hit the aircraft for sale market hard- and Swearingen’s sales dropped sharply. Just three more long-bodies- two Merlin IVs and a Metro- and 12 short-body Merlin IIIs were delivered in 1971- compared with 51 deliveries the year before. The sales drop created a cash flow disaster- and by the middle of the year Swearingen Aircraft was bankrupt and production was halted.

This might well have been the end of the story for Swearingen Aircraft- along with the Merlin and the Metro- but Fairchild Industries interceded. According to reports at the time- Fairchild had nine wing sets in production- and had yet to be paid for at least some of the wings already installed. After some study- Fairchild’s leaders concluded their best course of action to recover their investment would be to acquire Swearingen Aircraft and resume production.

To accomplish this- Fairchild formed a subsidiary corporation- called Swearingen Aviation Corporation- which acquired the assets of Swearingen Aircraft in February 1972 and set about putting the company back in operation. To the greatest extent possible the Swearingen workforce was re-hired- and Ed Swearingen remained as Chairman of the Board- but without the day-to-day operating authority.

A new senior management team was brought in- with a mandate to get the company profitable as quickly as possible. This meant discontinuing work on new designs- including the jet- and focusing on production and sales. Fairchild’s timing for this effort was quite fortunate. The recession in the business aircraft for sale market was coming to an end- and the business aircraft industry was about to enter a nine-year period of then-unprecedented growth- particularly in the business turboprop for sale market.

In addition- the regional airline industry was also on the verge of a huge expansion. The Swearingen product was perfectly positioned to take advantage of both of those trends- so for Fairchild it was a very good time to acquire Swearingen Aircraft. It took a while to get production running again- and the company was able to deliver just nine aircraft before the close of 1972.

These included six Merlin IIIs- two Merlin IVs- no Metros- and a leftover Merlin IIB. In 1973- however- with the economy picking up- deliveries reached 36 units- including 21 Merlin IIIs- nine Merlin IVs- and six Metros.

CHANGING TIMES
As 1974 got underway- the process for selling the Merlin and Metro changed significantly. The Garrett TPE 331 engine was being used on a growing number of competitive turboprops including the Mitsubishi MU-2 business turboprop for sale and some models of the Rockwell Commander. This left Garrett in the somewhat awkward position of competing against its own product whenever it sold a Swearingen airplane. Since engine manufacturing was the company’s core business- and aircraft sales something of a sideline- Garrett ceded its right to distribute the Merlin and Metro in North America- putting the sales responsibility back in the hands of Swearingen.

This changeover in sales responsibility almost certainly accounted for a downturn in Swearingen sales in 1974 – a year when total billings in the industry were up by nearly 10 percent. Swearingen deliveries totaled only 23 aircraft- including seven Merlin IIIs- eight Merlin IVs and eight Metros.

The following year brought a number of product upgrades to the Swearingen line- including changes to all three models. The short-body airplane was upgraded to Merlin IIIA status.

Improvements included optional anti-skid and power-assisted braking- and nose gear power steering through the rudder pedals. Changes in the bleed air system along with revised performance testing added almost 10 miles-per-hour to the cruise speed. The addition of two small windows at the rear of the fuselage gave the Merlin its final outward appearance until the introduction of the Fairchild 300 almost 10 years later.

The long-cabin airplanes were designated Metro II and the Merlin IVA in their upgraded configuration. They received all of the performance enhancements from the Merlin IIIA- plus the addition of new rectangular windows that were more than 50-percent larger than the round windows originally fitted to the long-cabin Swearingens. The new windows gave the long-body airplanes a distinctive new look.

Final production of the Merlin III closed out at 50 units over the four-year period from 1971 to 1974. A total of 25 Merlin IVs and 18 Metros were built in the same period. That was to be the last time any version of the Merlin would outsell the Metro.

CRITICAL DECISION
During the period between 1974 and 1976- as Swearingen re-established its marketing and sales operation under the direction of Fairchild- the company reached a critical strategic sales decision. It decided to focus most of the company’s sales effort on the regional airline market.

The reasoning was simple. When you sold an airplane to a corporate customer- the process came to an end. You had to start all over and find another new customer for the next airplane. When you sold an airplane to an airline- the process wasn’t over. The customer would come back- without having to be re-demo’d or re-sold on the benefits of the product- and buy more airplanes for sale; in some cases- a lot more airplanes.

With this marketing system in place- Swearingen adjusted its production strategy accordingly. This came to mean building as many regional airliners as the market would absorb- and then building as many corporate models as remaining production capacity would allow. This was a strategy that founder Ed Swearingen says he opposed bitterly- because he believed the new Merlin- with its speed and range advantages- was perfectly positioned to cut heavily into the market being occupied by the Beech King Air. The Merlin’s cabin was comparable with the King Air’s- and its Garrett TPE-331 turboprop engines were more fuel efficient than the Pratt & Whitney PT6 series used on the King Air.

Just as Swearingen’s vision of beating Beechcraft seemed about to be achievable- the company was turning its focus in another direction. Swearingen says he is disappointed at this outcome even today.

With Swearingen focusing its marketing efforts on airline sales- the sales mix of its product line predictably began to favor the Metro. During the period from 1975 to 1979- Metro II deliveries averaged 35 units a year- while Merlin III sales were just under 11 per year and Merlin IVs about seven each year.

It was in 1979- however- that Swearingen introduced the most successful model of the Merlin III- the IIIB. The primary difference between the IIIA and the IIIB was an upgraded engine – the TPE-331-10 which produced 900 shaft horsepower and turned a four-blade propeller. This power combination gave the Merlin IIIB a 300-knot cruise capability- which was an improvement of about 20 knots over the IIIA. In addition- there were minor upgrades to the electrical system.

In the three years the Merlin IIIB was produced (1979-1981)- Swearingen delivered 73 of the short-body aircraft. This compares with just 43 Merlin IIIAs that were delivered during the preceding four years it was in production.

KEEPING UP WITH THE TIMES
As the regional airline industry was growing- particularly in the United States in the late 1970s- operators began to express increasing frustration with the limitations forced on the 19-seat Metro by its 12-500 lbs gross weight. The airplane could only accommodate 19 passengers on comparatively short stage lengths – particularly in bad weather when IFR fuel reserves were necessary.

In an effort to relieve these problems and make more capable aircraft available to the regional airline industry after the U.S. airlines were de-regulated in 1978- the Federal Aviation Administration took action and created a special regulation to allow airplanes to be built under light aircraft criteria (FAR 23 regulations) but with a gross takeoff weight of more than 12-500 pounds- which had previously been the upper limit. This new regulation- SFAR 41- was to be effective for the next 10 years- starting in 1980.

Swearingen responded immediately- ceasing production of the Metro II at 175 units in early 1980 and introducing the Metro IIA- with a 13-230 lbs MTOW. Just 11 Metro IIAs were delivered before Swearingen could complete certification of the Metro III- which featured new TPE-331-11 engines- producing 1-100 shaft horsepower each and had maximum gross take-off weight of 14-500 pounds. A five-foot extension was added to each wing to generate extra lift. Three years later- without designating a new model- the gross weight of the Metro III was increased to 16-000 pounds.

With its greater power and increased gross weight- the Metro III became a much more capable regional airliner- and over the next 10 years Swearingen delivered 257 of them. SFAR 41 could also be used to build business airplanes- and in 1982 Swearingen introduced the Merlin IIIC- with a gross weight of 13-230 lbs. Structurally- the Merlin IIIC was built like the Metro IIIC in the center section but without the added wingspan. The IIIC carries a different FAA model designation than the earlier Merlins- but from a performance and systems standpoint- the Merlin IIIC is effectively a IIIB with a higher gross weight. The IIIC replaced the IIIB in Swearingen’s product line in 1982.

The Merlin IIIB had the bad luck to arrive in the market just as the demand for business turboprops had begun to collapse. Market-wide turboprop deliveries dropped from 918 in 1981 to 458 in 1982- and sank further to 321 units in 1983. It was not too surprising- then- that Swearingen only delivered 31 Merlin IIICs in the two years the airplane was produced.

In an attempt to add some sizzle in a falling market- the company- which by this time had been re-named Fairchild Aircraft- introduced the Fairchild 300 in 1984. The 300 was basically a Merlin IIIC fitted with winglets- giving it a very distinct appearance compared with earlier Merlins. In an effort to keep certification costs down- Fairchild made no attempt to take any performance credit for the winglets- and it is unclear what benefit they may or may not provide. Published performance data for the two airplanes is identical- and from a systems standpoint- both are the same.

With the turboprop market continuing to fall- Fairchild discontinued production of the Fairchild 300 in 1986 with just 10 units delivered over the three years it was offered in the market. This marked the end of short-body Merlin production with the final total at 331 aircraft.

The long-body Merlin IV continued to be available through 1991 when its SFAR-41 certification basis expired. Its sales were sporadic- with 32 units being delivered in an 11- year period. An additional 22 Merlin IVs were delivered in a cargo configuration called the Expediter in the same timeframe. There was also one special mission Merlin IV delivered to the Swedish Air Force in a maritime patrol configuration. The airplane featured an unusual antenna above the fuselage that extended from the forward door almost all the way to vertical fin. At the close of production- a total of 117 Merlin IVs had been produced between 1971 and 1991.

The final Metro model- the Metro 23- was introduced in 1991 in response to further changes by the FAA to the rules governing certification of regional airliners. The Metro 23 had upgraded engines (TPE-331-12) and an MTOW of 16-500 pounds.

The market for 19-passenger airliners was still strong in the first half of the 1990s- and a total of 78 Metro 23s were delivered in airliner configuration. Another 37 were purchased by the U.S. military- which gave them the designation C26. The U.S. Navy and units of the U.S. Army and Air National Guards still operate these airplanes. The last Metro 23 was completed in August of 2000. Final Metro production totaled 605 airplanes. Shortly after production ended- some of the tooling for the Metro and Merlin was destroyed- so it is highly unlikely that any of these airplanes will ever be produced again in the future.

NEW ECONOMIC LIFE
Collectively- 1-053 Metros and Merlins were built in the 34-year span between 1967 and 2000. Approximately 750 are still operational around the world (see map above). And with the increase in fuel cost over the past two years that has given new economic life to older turboprops- it would appear that the Merlin/Metro fleet seems destined yet to continue to be a factor in business aviation- passenger and cargo hauling- and military special mission applications for some time to come.


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