How Braniff is struggling to regain financial altitude

Braniff International Airways has always been promotion-minded. In the past it has painted its jets like jellybeans, hired Alexander Calder to make the ''birds'' into giant flying canvases, and employed Gucci and Halston to decorate the interiors of the planes.

Today, the airline is involved in the biggest promotion of its life: trying to persuade 39 lenders not to permanently ground it. This week Braniff, the eighth-largest US carrier, will meet with the lenders, who have already agreed to defer principal and interest payments on its more than $800 million debt through October, and present a financial and operating plan that will go a long way to determining whether or not the airline survives.

The key to this plan, company officials say, will be a reduction in its massive debt. ''A company with revenues of a billion dollars cannot afford a debt of $858 million,'' states Sam Coats, vice-president for Braniff's domestic and international affairs. Lenders will be asked to accept some form of equity (stock) in the airline. And, in return for giving it more time to fly, airline officials will promise the lenders that its belt tightening and streamlining measures will move it into the black sometime in the future.

''The company must be able to show the lenders that it can get by without the need for more money and can generate the cash necessary to meet expenses,'' says analyst Paul Stuka of Fidelity Management & Research Corporation in Boston. ''And then it must be able to show it can become profitable,'' he adds.

Of all the airlines in financial difficulties, airline analysts agree that Braniff International is in the worst shape. Technically, the airline already qualifies for Chapter XI. As Simeon Trotter, an analyst with Rauscher Pierce Refsnes Inc. in Dallas, points out, the company has a ''negative net worth,'' now owing $60 million more than it has in assets.

Every item the company owns, from the stainless steel eating utensils to its multihued airplanes, has been pledged as collateral to its lenders. Last year the company lost $160 million and its auditors noted that it was questionable if the company could continue as a going concern.

''The only reason the lenders haven't pulled the plug yet,'' Mr. Trotter says, ''is . . . the lousy market for used airplanes.''

If Braniff does end up watching its equipment auctioned off, it won't be for lack of trying to save the airline. In recent weeks, to generate the cash flow necessary to stay alive, the company has taken some drastic steps.

Last month, for example, the Braniff work force of 9,500 agreed to defer receiving half of its paychecks for nine days. This deferment has continued on a rolling basis, giving the carrier greater cash flow. The employees last fall also took a 10 percent pay cut and the pilots agreed to fly five hours a month longer without additional compensation. Braniff's Mr. Coats says the company is also trying to get out of its lease at its current modern world headquarters building so it can move into an old hangar at Love air field in Dallas. ''We'll be better off in a hangar without windows, with metal desks and fruit crates,'' Coats says, ''because we'll save $600,000 per month in rent.''

In another effort to get additional cash, Braniff has agreed to lease its South American routes for four years to Pan American World Airline for $30 million. Other carriers question the legality of such a deal. Eastern and Air Florida say they would like the right to fly some of those routes, particularly to such locations as Panama, Equador, Peru, and Colombia. Other Latin American routes, however, would require a heavy investment in longer-range equipment, points out Jim Ashlock, a spokesman for Eastern Airlines.

Trotter believes the Civil Aeronautics Board (CAB) will approve the Pan Am plan, since it would be ''politically unpopular'' not to. But, he adds, ''it puts the CAB in a sensitive spot.''

If the CAB approves the Pan Am deal, Braniff will streamline even more. By the end of the summer, says Coats, the airline will be down to 6,500 employees -- from 15,000 at its peak. It will also reduce its fleet to sixty 727-200s and three 747s, from 116 airplanes. It will sell its DC-8s and eliminate a $15 million loss it took last year on its South American runs.

If Braniff survives, it will be a totally different airline than the one that used to decorate its planes with Calders. The new Braniff has only one class of service, called Texas class. It offers discount fares, much like New York Air. By offering discount rates, the line has improved on its productivity by cutting down on the amount of time the reservations clerks spend on each call by 30 percent.

''People used to call and shop,'' he explains. ''Now they don't need to.''

In an effort to win customers, Braniff has offered some promotional fares that have irritated its rivals. For example, last month Braniff offered a ticket for $1 to anyone buying a regular Braniff ticket. American Airlines, its Dallas rival, immediately offered a free ticket on the same runs. The fare incensed American's president, Robert L. Crandall, however, who suggested that he would rather see an airline go out of business than offer such unprofitable fares.

Braniff now says it believes its fare structure may not be good for all carriers. But it intends to survive by offering low-fare service.

Trotter believes the next six weeks will be critical to the airline's fate. If it can get past May, he says it might survive. And Mr. Stuka notes that the airline may still have a few cards left up its sleeve: It can sell gate space at Dallas-Ft. Worth airport or in Houston to its rivals.