[Congressional Record (Bound Edition), Volume 157 (2011), Part 10]
[Senate]
[Pages 14388-14389]
[From the U.S. 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:

       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.

[[Page 14389]]

       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.

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