[Congressional Record Volume 157, Number 144 (Monday, September 26, 2011)]
[Senate]
[Pages S5989-S5991]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
TRIBUTE TO LAWRENCE H. LEE AND GERALD GRINSTEIN
Mr. HATCH. Mr. President, I rise today to pay tribute to two men
whose influence has greatly benefitted my State.
My good friend Lawrence H. Lee was, at one time, the CEO of Western
Airlines. As you may know, before merging with Delta Air Lines in 1986,
Western was one of the largest airlines serving the western U.S.
In 1982, as an executive at Western Airlines, Lawrence was
responsible for establishing a hub for the airline in Salt Lake City,
UT. This would prove to be a consequential decision, both for the
airline and, most especially, for the economic future of the State of
Utah.
In the early 1980s, Western Airlines was on the verge of bankruptcy.
Lawrence was appointed CEO in 1983 and tasked with the job of turning
the airline around. Under his leadership, they were able to reduce
costs and return Western to profitability. Ultimately, this success led
to Western's merger with Delta Air Lines.
During his tenure as CEO of Western Airlines, Lawrence's right-hand
man was none other than Gerald Grinstein, Delta's future CEO. An
excerpt from Lawrence's journal gives an account of Mr. Grinstein's
efforts to save Delta Air Lines and preserve its Salt Lake hub.
It is important to note that Delta's Salt Lake hub, which exists as a
direct result of my friend Lawrence's decision to create a hub there
for Western Airlines, is vital to Utah's economy. Salt Lake City is
small relative to other major airline hubs in the U.S. Therefore, the
city and its surrounding community receive an almost inordinate
economic benefit from the presence of the Delta hub. Delta's Salt Lake
hub attracts untold amounts of business to Utah. It was cited as a
reason that Utah was able to secure the Winter Olympics in 2002. All
told, Utah receives nearly $18 billion every year from commercial
aviation, most of which is derived from Delta's presence in the market.
I thank my good friend Lawrence Lee for his contribution to Utah's
growth and development. In his journal, Lawrence states that Gerald
Grinstein should be considered a ``Giant of Salt Lake City.'' I
certainly agree. But, I believe much the same could be said about
Lawrence Lee.
Mr. President, as testimony to the importance of Lawrence Lee and
Gerald Grinstein to Utah's economic growth, I ask unanimous consent
that an excerpt from the Personal Journal of Lawrence H. Lee be printed
in the Record.
There being no objection, the material was ordered to be printed in
the Record, as follows:
[[Page S5990]]
Excerpt from the Personal Journal of Lawrence H. Lee--2011
When an ``unfriendly takeover'' of a public transportation
company occurs, one of the most important events to transpire
is the testimony of each of the two Chief Executive Officers
before the United States Senate Commerce Committee. The
answer to each of the Senator's questions, and the way each
Senator reacts to that answer, can pretty well predict
whether or not they will bless the takeover.
This event took place between US Airways and Delta Air
Lines. US Air had offered between eight and ten billion
dollars to purchase Delta Air Lines while Delta was in
bankruptcy. They had the financing arranged to buy Delta and
it was apparent the Creditor's Committee was in favor of
their purchase arrangement.
Had you been given the job to select a candidate who would
ultimately become Delta Air Lines' CEO to testify at this
hearing, what array of education, talent and experience might
be included in your list of credentials? The future of
thousands of employees and the financial health of at least
one state's economy would most likely hang in the balance of
this person's success in giving convincing testimony at this
Senate hearing.
If I had been given that job, this is what I might have
submitted as requirements to assure victory.
Graduate from the law school of an acclaimed university.
Be the Chief of Staff to an influential United States
Senator.
Practice law as Chief Counsel to the Commerce Committee of
the U.S. Senate.
Be Counsel to the Senate Merchant Marine and Transportation
Subcommittee. Serve on a major airline's board of directors.
Ultimately be appointed Chief Executive Officer of that
company.
Merge the airline with a partner who would keep the
airline's current hub operations in place.
Be appointed to the merged airline's board of directors and
so impress the others on the board that they would extend the
person's tenure beyond the mandatory age for leaving the
board.
Take over the leadership of that airline when it is
financially crippled and then take it through bankruptcy.
So begins my account of Gerald Grinstein's rescue of Delta Air Lines
and the Salt Lake Airline Hub
One must look at Grinstein's post-graduate history in order
to understand how decades later he arrived at a point where
his actions, while the airline was in bankruptcy, were
crucial to the future economy of Utah.
Not long after Jerry graduated from Harvard Law School and
entered the political arena, he obtained a position in
Washington as Chief Counsel to the U.S. Senate Commerce
Committee and Counsel to the Merchant Marine & Transportation
Subcommittee. This put him in touch with some very important
Senators; several who were still serving when he was CEO of
Delta Air Lines.
Grinstein was introduced to Western Airlines by Neil
Stewart, Western's Vice President Governmental Affairs. Neil
knew him when he was Administrative Assistant to the Senator
from the State of Washington, Warren G. Magnuson.
Dominic P. Renda, then CEO of Western, was seeking a
replacement for a retiring board member from Seattle. He
asked Stewart for a suggestion and Neil recommended Gerald
Grinstein who was then elected to the Board of Directors in
1977. During a later discussion with an influential member of
Western Airline's board of directors, Bishop Victor Brown, I
discovered that we both had the feeling that there was
something special about Jerry. Although he had never held an
executive position in a corporation, we felt he had un-tapped
potential.
In the 1980's, Salt Lake City seemed ready to do what was
necessary to become a greater draw for new industry. To have
this happen, the right people were in place; especially the
new Mayor, Ted Wilson. He had based his campaign on the
expansion of the Salt Lake Airport. When I arrived in
February, 1982 with the news that Salt Lake City was to be
Western's main hub operation, it was as though Mayor Wilson
had been awaiting our arrival. He welcomed us with open arms.
With the successful completion of the Salt Lake hub, and
subsequent building of the ``D'' concourse, Western Airlines
was in the position to meet the new deregulated marketplace;
however, our cost structure was still too high to fight off
the new low-cost carriers. This led to continued losses.
By April 1, 1983 I was asked to take on the chore of
turning Western around. I knew I would need someone at my
side who was a good communicator with fresh views; someone
who was strong and yet sufficiently flexible to step into a
new career.
Western was on the edge of bankruptcy, so the changes
required had to be made quickly. From the moment I was asked
to be the CEO I knew Jerry Grinstein was the man that could
fill this position. In January, 1984, he accepted the
position of President and Chief Operating Officer.
We at Western Airlines were successful in lowering costs,
showing a record annual profit; and a potential groom, Delta
Air Lines, had proposed marriage. In their proposal, Delta
offered Western two seats on their board of directors. Jerry,
then the CEO, took one of them. Later his experience and
performance was deemed so valuable that the Delta board
waived the ``age 70 and out'' rule so Jerry could stay on the
board.
When Leo Mullin, Delta's CEO, resigned, Jerry was asked to
be the President and CEO. Delta was in grave financial
condition. Grinstein did everything in his power to keep
Delta out of bankruptcy, but the pilot's cooperation did not
come early enough to keep this from happening. Therefore, on
September 14, 2005, Delta and its subsidiaries filed a
petition for bankruptcy protection.
During this bankruptcy, US Airways, Inc. made an
unsolicited eight-billion dollar offer to buy Delta Air
Lines. Their plan was filed and was being evaluated by the
Creditors Committee. Grinstein had submitted Delta's plan for
recovery to this same group and one was being weighed against
the other.
The Creditors Committee knew that the merging of Delta with
US Airways would require government approvals. There was a
strong employee program mounted at Delta to fight off this
takeover. Nevertheless, in spite of their efforts, rumors
persisted that the Creditors Committee felt US Airways offer
was best and that they could get the government approval
necessary to allow it to go forward; that is, until Jerry
Grinstein appeared before the Senate.
Jerry, and Doug Parker, CEO of US Airways, were asked to
testify before the Senate Transportation Sub-Committee; the
same august body to whom Jerry had once served as counsel.
Grinstein was in his favorite element. He was calm, collected
and totally prepared to defend his plan to exit bankruptcy
over Parker's plan to purchase Delta.
There was standing room only and the public area was filled
with uniformed personnel from Delta Air Lines. Pilots in
their full regalia were lining the walls. Those who had
initially resisted Grinstein's attempts to cut costs were now
on his side and cheering him on.
At one critical point of the long examination, Parker made
a speech on how he was going to maximize profits from his
proposed venture and a Senator asked where he was going to
get the aircraft to accomplish this feat. His quick answer
was, ``From Delta.'' The pilots along the wall went
ballistic. Jerry handled this well and the meeting soon
ended.
Following this session, it was obvious to the Creditors
Committee that approval from the government now looked risky
and not long after, Delta's plan was accepted. Grinstein's
testimony was the linchpin in blocking US Airways' effort. No
one else in the world could come close to accomplishing what
Jerry did in that Senate Chamber. Jerry was at the right
place at the right time to preserve the transportation
service that Western Airlines established in May, 1982; the
Salt Lake City Hub.
One might wonder why I place so much emphasis on this
particular hub. I'll explain this as briefly as I can. It is
because, in ratio to population, Delta Air Lines brings to
Utah an inordinate amount of employment and revenue, as
compared to other major airline hubs in America.
In 2006 Campbell Hill was engaged by the Air Transport
Association to survey all 50 States in the Union to see what
percentage of their economy was derived from commercial
aviation. Their study indicates that Utah is receiving close
to eighteen-billion dollars a year from commercial aviation.
The only States higher than Utah in percentage of employment
from commercial aviation are Hawaii and Nevada; no surprise,
considering their heavy tourist trade. This is why the Salt
Lake City aviation hub is so vital to Utah's financial
system.
Another point to consider is that many of the companies
that have opened businesses in Utah have stated that a major
factor in their decision is the superior air transportation
service available to them.
One other detail, the hub offers an immeasurable prestige
to Utah by attracting many events that would otherwise book
elsewhere. The greatest example of this is the 2002 Winter
Olympics. To quote Kern Gardner, the man credited for
recruiting Mitt Romney to organize those Olympics, ``Without
the Delta Air Lines hub we would never have been successful
in bringing the Winter Olympics to Salt Lake City.'' A point
of interest, Kern was Chairman of the Airport Commission when
Western decided to bring the hub to Utah. He was a great help
to us at that time.
To me, the most significant contribution of the airline hub
in Salt Lake City is the service it performs for the Church
of Jesus Christ of Latter-day Saints who has its headquarters
in Salt Lake City. The LDS Church has become a strong-
worldwide entity and, with its large missionary program,
books more travel than most big corporations. Recently there
were non-stop flights added from Salt Lake City to Paris and
to Tokyo. When this hub was formed by Western Airlines, we
could only dream of such a local achievement. Without the LDS
Church Headquarters in SLC it is doubtful one could support
this direct-flight convenience.
By any measure, Grinstein should be considered ``A Giant of
Salt Lake City.'' Through his efforts he helped preserve the
``economic structure'' of which I have spoken. Had US Airways
been successful in their attempt to purchase Delta Air Lines,
the multi-billion dollar a year contribution to Utah's
economy from the Salt Lake City aviation hub could have been
severely disrupted.
Utah enjoys a finely-tuned transportation service and we
owe Gerald Grinstein a debt of gratitude for helping to keep
it in place.
[[Page S5991]]
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