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Merger a flying success for SLC
This is an archived article that was published on sltrib.com in 2007, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

As its champagne-sipping mascot would say in the TV ads, Western Airlines was "the only way to fly."

This month marks the 20th anniversary of Delta Air Lines' $860 million merger with Western. As part of the deal, Delta absorbed Western's airport hub in Salt Lake City, clinching the hub's future and over the ensuing decades yielding levels of airline service that most midsized cities find hard to match, many pundits said Tuesday.

"We are very well-served for a city of our size. We are blessed, and we should be thankful," said Fred Ball, who was chairman of the Utah Air Travel Commission and CEO of the Salt Lake Chamber at the time.

By many accounts, the merger was every bit as nerve-wracking as US Airways' failed bid for Delta earlier this year. Skeptics feared the Salt Lake hub would close, though Delta had promised otherwise.

Although Salt Lake was served by nine big airlines and three regional carriers, Western controlled 70 percent of the market with 150 daily flights. Five years earlier, when Western set up the hub, the number was barely two dozen.

"They went from 29 flights a day overnight to 59, which essentially doubled their service. They grew it pretty fast," said Louis Miller, the airport's executive director at the time. Miller now runs Tampa International Airport in Florida.

So when Delta announced it would buy Western, a near-panic ensued. Delta operated only a handful of daily departures from Salt Lake. Its hub at Dallas Fort Worth International Airport was uncomfortably close. And unlike Western, Delta's work force was largely non-union.

"It was fear of the unknown," said Brett Rydalch, who rose from a job as a Western customer-service agent to become director of Delta's Salt Lake station. "Anytime you go through a merger, questions emerge about seniority, if you are going to work, and where you are going to work."

Delta chief executive officer Gerald Grinstein was Western's CEO at the time of the merger. As he fought off US Airways' hostile bid in recent months, Grinstein has frequently cited the deal as one of the few successful combinations in airline history. Delta expects to emerge from bankruptcy on April 30.

"US Airways acquired Piedmont [in the 1980s]. TWA acquired Ozark. Northwest grabbed Republic. And Delta merged with Western. The only one that didn't reduce competition was Delta's. It added a western presence for Delta. All the others just eliminated competition," Michael Boyd, an airline analyst at the Boyd Group in Evergreen, Colo., said.

What's more, Delta had deliberately avoided the merger dogfights that had broken out in the 1980s. Instead of buying up competitors, the Atlanta-based airline had grown by adding hubs in Dallas and Cincinnati, according to a 1986 Time magazine report. By bidding for Western, Delta was acknowledging that its growth plans were unsuited to the turbulent times. To become a force in the West, Delta would have to buy Los Angeles-based Western, Time reported.

Western, meanwhile, was finally pulling out of an extended downturn. By 1985, it had recovered from five years of losses that at one point cost employees a 29 percent pay cut. Only after Grinstein became CEO in 1985 was Western able to make money. Merging with profitable Delta would increase its new financial stability.

"A merger or buyout was inevitable, or our survival would be at risk," said Chad Donoghue, a Delta station administrator and former Western ramp agent. "I think the [airline] industry was fairly stable, but our costs at Western were too high."

Ball said air service from Salt Lake has improved greatly. In the years before the merger, the few flights that were available to eastern destinations passed through Denver's Stapleton International Airport or O'Hare International Airport in Chicago.

"Delta gave us the possibility of overflying [those airports]. And we were looking at their route map and could see great possibilities for nonstop service. And that's what happened. In retrospect, the purchase of Western by Delta was extremely positive for Salt Lake City," Ball said.

Delta has fewer daily departures today than Western did at the time of the merger. Miller said the decline is being offset by increasing number of flights operated by its regional partners SkyWest Airlines and Atlantic Southeast Airlines, both subsidiaries of St. George-based SkyWest Inc.

Reasonable fares have been another benefit. Miller said Delta has been pressured in Salt Lake by Southwest Airlines to keep ticket prices in competitive markets low.

"Otherwise they would be considerably higher, just like they are in . . . Cincinnati, with no low-fare competition," he said.

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