Allan Loughead and his brother Malcolm Loughead had operated an earlier aircraft company, Loughead Aircraft Manufacturing Company, which was operational from 1912 to 1920. The company built and operated aircraft for paying passengers on sightseeing tours in California and had developed a prototype for the civil market, but folded in 1920 due to the flood of surplus aircraft deflating the market after World War I. Allan went into the real estate market while Malcolm had meanwhile formed a successful company marketing brake systems for automobiles.