PSA had gained a nickname that was at once endearing and mordant: PSA was the Go-Go Airline.
In the third-floor lobby of the Pacific Southwest Airlines headquarters at Lindbergh Field, there is a photograph that recalls better days. It pictures five gorgeous stewardesses wearing micro-minidress/hot pants outfit, circa 1972, lounging in a flora-filled lanai. It was a time when PSA was expanding rapidly. The airline itself had become just one cog in a corporate wheel that included hotels, radio stations, a sportfishing business, a rent-a-car firm, and two jet-leasing corporations. PSA had gained a nickname that was at once endearing and mordant: PSA was the Go-Go Airline.
Premiere flight, May 6, 1949. Initial operations began with a leased, thirty-one-seat DC-3 to fly once a week between San Diego and Oakland, with a layover at the Hollywood-Burbank airport.
Now, of course, the airline is entwined in a bitter dispute with its flight crews over salaries and working conditions. The expansion of the early 1970s has been trimmed severely; so severely, in fact, that there are rumors the company may bail out of the scheduled air-transport business altogether and become strictly a charter operation. It may be just as well that Kenny Friedkin, who founded the airline in 1949, isn’t around to witness this newest misfortune to his brainchild. But then again, if he were still here, things might have turned out differently.
Lockheed Electra. By the end of the holiday season of 1959, PSA had phased out its four DC-4s and had completely re-equipped itself with three Lockheed Electra prop-jets and one DC-6.
Friedkin was from the second generation of pilots. Airplanes had lost their novelty by the time he began flying during the Depression. The link between early motorized flight and the future was then being forged: air-mail routes were crisscrossing the globe; passenger-service airlines were nascent throughout the nation; and the recreational use of aircraft was being exploited by private flyers and barnstorming troupes. Another area in which flying machines had already proven themselves was war.
Boeing 727-100, c. 1965. The airline accounted for forty percent of the air traffic along the San Diego-L.A.-San Francisco air corridor by 1963.
In the immediate years prior to America’s involvement in the Second World War, Friedkin, not yet thirty years old, ran a flying school in Bakersfield to train American volunteers for Britain’s Royal Air Force. When the United States finally entered the global conflict, the young pilot set up a flight-training school for the Women’s Air Force Service Pilots in Sweetwater, Texas. He continued the training program until the armistice, after which he flew for Con Airways, a contract airline run for the military by Consolidated Vultee. Later, he became a test pilot for General Dynamics.
Lockheed L-1011 Tri-Star, c. 1974. The airline could not accept more of the unprofitable jets. In fact, it could no longer afford to fly the two it already had.
But Friedkin, like the pioneer aviators before him, was too much an independent sort to fly very long for others. He teamed up in 1946 with his old pal Joe Plosser to form a flying school for ex-servicemen on the G.I. Bill. Plosser-Friedkin Flight School trained dozens of veterans that first year in San Diego, after which Friedkin, with the aid of some financial backers, bought Plosser’s interest in the school to become sole owner of the business, which he renamed Friedkin School of Aeronautics.
Much of the blame for PSA's incredible financial fiasco was laid at the feet of its chief executive officer and chairman of the board, J. Floyd Andrews.
One of the original instructors in the Plosser-Friedkin enterprise was Eleanor “Fergy” Glitherow. She is now the treasurer for Pacific Southwest Airlines and its parent body, PSA, Incorporated. A small, trim woman in her late fifties, she remembers those first years aloud in a deep, sandpapery voice. “I was a WAVE on North Island,” she says, “and I trained pilots on the ground for their instrument rating. When I got out of the service, I heard there was a flight school starting up at Lindbergh Field. I went over there and applied, Kenny hired me, and I started training pilots.”
Friedkin, 1951. It may be just as well that Kenny Friedkin, who founded the airline in 1949, isn’t around to witness this newest misfortune to his brainchild.
After the bulk of soldiers were discharged following the war (and after most of them had used their G.I. Bill education funds, on which the flying school depended). Friedkin began to concentrate on other ways to bring in some money. In 1948 he formed Friedkin Aeronautics, Incorporated, and began charter passenger service with a converted Cessna UC-78. Out of that charter service grew a company that within fifteen years would be the largest intrastate carrier in the nation — Pacific Southwest Airlines.
Shimp is frequently seen walking up and down the office corridors with questions for his lieutenants. There is once again a feeling of belonging to a small, select group trying to get a job done.
Exactly how the name was arrived at, Eleanor Glitherow recalls it like this: “Let’s see, there was already an airline called Pacific ... no, wait. There was an airline called Southwest. Maybe there were two airlines with those names. Anyway. I think the name came about to well, I think to confuse the passengers.” The idea behind the new airline was to undercut the fares of its competitors and to attract, as customers, the large military population of San Diego.
Glitherow was in charge of fifteen employees from the financial department who manned the telephones to notify the next of kin. The total dead was 144.
Pacific Southwest Airlines began initial operations with a leased, thirty-one-seat DC-3 to fly once a week between San Diego and Oakland, with a layover at the Hollywood-Burbank airport. The original fares for the three-city route were: San Diego/Oakland, $15.60; San Diego/ Burbank, $5.65; and Burbank/Oakland. $9.95.
There were twenty-seven paying passengers aboard the airline's first flight on May 6, 1949. Those first flights proved so successful that Friedkin leased a second DC-3. The low airfare was the company’s primary lure, and it soon earned a nickname as the Poor Sailor’s Airline — PSA. By the end of the first year the company had carried 15,011 passengers, employed fifty people (including pilots J. Floyd “Andy” Andrews and William Shimp, both later to become presidents of the airline), and perhaps most important of all, made a net profit of $11,984.
The decade following the airline's inception was a tough time financially. The company lost $8597 in 1950, $26,608 in 1952, and $37,577 in 1953. But these losses were largely considered to be acceptable, the result of capital expenditures for growth; for example. Friedkin purchased his leased DC-3s and bought two more in 1952 at a cost of $25,000 apiece. San Francisco was added as a fourth destination in 1951 (but PSA cancelled Oakland three years later), and by 1953 the company had 190 employees. However, the fledgling airline still had trouble making its existence known. “We had to explain to the travel agents that we really were a certified airline,” says Glitherow. “Most people had never heard of us.”
But still Friedkin was bent on growing. In 1955 he replaced his newly purchased DC-3s with seventy-seat DC-4s purchased surplus from Capital Airlines. The single thing that kept PSA going was that it charged twenty percent less than its California competitors (because PSA flew only within the state, it came under the jurisdiction of the state Public Utilities Commission, the PUC. which exercised considerably fewer fare and route restrictions than the federal Civil Aeronautics Board, which governed interstate carriers).
Friedkin used the lax PUC restrictions to full advantage by increasing the number of flights during the holidays and decreasing them during slow periods. By 1958 Los Angeles was added as a destination. It cost $5.45 to fly from San Diego to Los Angeles, and $11.81 to fly from L.A. to San Francisco.
In a sense of the word that has since become vulgarized, PSA considered itself a family. Ten years after the airline’s first flight, there were 220 employees, most of whom knew each other on a first-name basis. The hostesses (as the flight attendants were then called) and the flight crews were required to spend only one night in eleven away from home, and their pay was comparable with the other airlines. PSA was an underdog battling the giants, and this only helped the feeling of togetherness, the sense that all the employees were working toward a common goal. PSA began billing itself as the “World's Friendliest Airline.” and the public was beginning to believe it.
Probably the biggest step forward for PSA was its decision to enter the jet age. In mid-1959 Friedkin announced that his company would buy two French-built Caravelle jets at a cost of S1,950,000 each. He went so far as to invite dozens of local civic leaders and other guests for a test flight in one of the aircraft. The new jets would have cut the air time from San Diego to San Francisco in half, to only fifty-six minutes. Even though that deal was later cancelled due to problems of negotiation between the airline and French authorities. Friedkin was insistent that PSA buy some jets to maintain its competitiveness.
By the end of the holiday season of 1959, PSA had phased out its four DC-4s and had completely re-equipped itself with three Lockheed Electra prop-jets and one DC-6 (the DC-6 was replaced with a fourth Electra in 1961), making it the first all turbine-powered airline fleet in the United States. ‘ That was probably the most exciting time in the airline's history," says Glitherow. “You have to realize those were the first brand-new aircraft we ever had up to that time. I went up to the Lockheed plant in Burbank and flew the test rides in them. They were just fantastic."
Observers of PSA no doubt wondered how an airline with a four-plane fleet and a gross income in 1958 of $3.5 million could afford a massive re-equipment program costing about ten million dollars. The program was accomplished by a lease arrangement with Barron Hilton, son of hotel tycoon Conrad Hilton and originator of the Carte Blanche credit-card system. PSA agreed to pay Hilton's Electra-Hilt Corporation $32,000 a month on the three-and-a-half-year lease. Even with the new Electras, PSA was still something of a Mom-and-Pop business. In fact, that's exactly what it was, with Kenny Friedkin acting as president and his wife, Jean, acting as vice president and interior decorator (she designed the interiors of the Electras).
In 1962 PSA ordered its fifth Electra and spent $50,000 modernizing its main office on the southwest side of Lindbergh Field off Harbor Drive. The company now employed 450 people, more than half of whom resided in San Diego. It was the year of the company's best profit margin to that date: $1,368,770. It was also the end of an era, because on March 17, 1962, Kenny Friedkin died. J. Floyd Andrews assumed the presidency almost immediately.
Andy Andrews had been trained by Friedkin twenty-two years earlier and became a pilot with the Royal Air Force. The athletic, balding Kansan, well-known for his sense of humor and gregarious personality, had returned from the war to become an instructor with the flight school and one of the airline's first pilots. He held various positions under Friedkin, including assistant to the president and vice president of operations. With Andrews as chief executive, PSA began to change personalities; it became more colorful, more outgoing . . . just like its president. And just as the airline reached its highest peak under Andrews' leadership, it also reached its lowest ebb.
The first task Andrews set for himself was to raise cash to expand the operation even more, and one of the most effective ways to do that was to sell stock in the company. PSA sold public stock for the first time on February 13, 1963. The 313,000 shares were sold that day for nineteen dollars each, and by the end of the first day on the market each share had increased in value by seventy-five cents. In less than five months, the shares were selling for thirty dollars each. The stock sale laid the groundwork for the company’s purchase of five Boeing 727-100s two years later.
By May of 1963, PSA was the largest intrastate carrier in the country, with a fleet of six Electra propjets. The airline accounted for forty percent of the air traffic along the San Diego-L.A.-San Francisco air corridor. Its schedule called for 290 flights weekly, one-way north or south, and a 15,000-square-foot building was constructed that September for $500,000 to house an engine-overhaul facility. The company strove to keep as many planes as possible flying at all times, and it was said of Andrews, “The secret of his success is that he has six planes and keeps eight of them in the air all the time."
The frenzy of growth during the mid-1960s was almost breathtaking. Every month saw another record broken. In January 1962, a record number of passengers for that month was set at 94,583. The next January a new record was set at 113,583 passengers. In August 1963, the all-time record was made at 132,743, and was broken the following May with 132,870. PSA greeted its millionth customer of 1963 in October; its millionth of 1964 in September; its millionth of 1965 in August.
In May of 1965 the company bought five Boeing 727-100 jetliners for a total of $27.5 million, with an option to buy a sixth. Then in that same year, the company was listed on the big board of the New-York Stock Exchange. Although it didn't add anything financially to the company, it greatly added to the airline's prestige, and Andrews realized the benefits of a positive image. Charity flights became commonplace during the 1960s — sightseeing flights, the income from which went to this or that cause. “Operation: Baby lift” which occurred in May, 1969, had the airline fly four orphaned infants to Chico in northern California where four families were waiting to adopt the children. “Father's Day Flights" became something of a tradition during the 1960s, in which the airline flew scenic trips around the country for the public and gave the proceeds to the Multiple Sclerosis Hope Chest. In October, 1970, while much of the country was ablaze from a series of wild brush fires, the airline flew “Fire Flights” for sightseers at five dollars a ticket, and then gave the money to victims of the fires. San Diego had come to regard PSA as an integral part of the city, a beloved company. Speaking out against the airline was tantamount to municipal treason. It was one of the greatest public-relations accomplishments the city had ever seen.
PSA made its first request to fly out of the state in August of 1967. In exchange, PSA would have come under the purview of the Civil Aeronautics Board. The biggest disadvantage would have been the installation of a new accounting system required by the CAB, but the benefits would have more than compensated. Andrews wanted the airline to compete on the heavily traveled San Francisco-Portland-Seattle corridor, and vowed to charge fares forty percent lower than the other airlines serving that route. The request, though, was turned down because of the tight federal regulations governing the intrusion of new airlines into established routes. It was not the last time PSA would apply for CAB certification, which was more than ten years in coming.
Andrews, ever the visionary, viewed the CAB denial as only a minor setback in his plans for expansion. There would be a better moment to try again. In the meantime, there were other ways to grow. In May of 1967, PSA began its flight-training school at Brown Field on Otay Mesa. Lufthansa, the West German airline, sent ninety trainees to San Diego that year to be instructed at a cost of one million dollars. Three months later Japan Air Lines dispatched 120 would-be pilots to Brown Field for training. Not only was the flying public appreciating PSA, so was the commercial airline community throughout the world.
But Andrews wanted more. Looking back at his schemes for expansion, it now seems his dreams for the airline bordered on the megalomaniacal, especially when it came to the ill-fated Fly-Drive-Sleep program that was to be the cause of PSA's near collapse eight years later.
The Fly-Drive-Sleep idea was disarmingly simple. People who flew from one city to another on business (the theory went) needed certain things. First, they needed an airplane to transport them. Second, they needed ground transportation once they arrived at their destination. And finally, they needed a resting place for the time they spent in that city. PSA already had the airline, which took care of the “fly" third of the plan. Next, Andrews went hunting for the "drive." With that in mind, PSA purchased Valcar Rent-A-Car in the latter part of 1967. From the start, it was an utter disaster. It lost money every month under PSA’s control, except one. But most new businesses lose money in the first year, so no one thought there was reason to panic.
PSA entered the 1970s with an all-Boeing-equipped fleet that included one 727-100, sixteen 727-200s, and nine 737-200s. In the first year of the new decade, the airline began to lobby for its Long Beach connection, still with an eye on its Fly-Drive-Sleep program. Service to Long Beach airport began in December 1970, and twelve months later there came from the Long Beach City Council approval to operate the 400-room hotel within the Queen Mary ocean liner permanently docked at Long Beach Harbor. PSA agreed to pay the city $65,000 a year or five percent of the hotel's first two million dollars in gross receipts, whichever was greater.
PSA had hotel fever. Within the first three years of the decade, the airline owned not only the Queen Mary Hotel, but also the Islandia Hotel on San Diego's Mission Bay; the San Franciscan, an elegant, seventy-year-old hostel in San Francisco; and the ten-story, 350-room PSA-Hollywood Park hotel, which broke ground in January of 1972 and was expected to open in mid-1973.
But soon it became apparent that the Fly-Drive-Sleep plan had gone haywire. Not content with its hotels, car-rental firm, and airline (which seemed to be dimming in importance among the other businesses), PSA set its sights on the broadcast industry. The company bought two FM radio stations in August 1970 (KPSE San Diego and KPSA Los Angeles), from Biola College in L.A. In 1971 it bought two more FM stations (KPSJ in San Jose and KPSC in Sacramento). George Whitney, a former general manager of the KFMB stations in San Diego, was made chief of PSA Broadcasting. Incorporated, a wholly owned subsidiary of the airline. The four FM stations all played an easy-listening format. In September of 1972, PSA Broadcasting purchased Musicale from KSJO radio of San Jose. A PSA spokesman said at the time that Musicale, a background-music supplier that served the San Jose area, would be joined by a second such acquisition: P.M. Background Music Company of San Diego.
PSA's new motto should have been simply. “Buy It!" By mid-1972, the company owned two jet-leasing companies: Jetair Domestic Leasing, Incorporated, which, among other deeds, leased a Boeing 727-100 jetliner to Alaska Airlines in June. 1972; and Jetair Leasing. Incorporated, which leased five Boeing 727-200 airliners to All-Nippon Airways of Japan during the same period.
But even all this was not enough. Andrews moved PSA into the sportfishing business in November 1972 with the christening of its new watercraft, the Scat-1, a red-and-white, seventy-foot-long catamaran anchored at the Islandia Marina in Mission Bay. It was chartered out to fishing panics from PSA's Islandia Hotel.
But the bubble soon began to let slip the hot air that had caused it to expand so rapidly. In September of 1971, PSA decided to close its Valcar operation. In 1970, the car-rental firm had lost $499,000 in the first half of the year alone. It lost $214,000 in the first half of 1971. It was too great a drag on the company's finances, so the 1200-fleet operation was dropped. Losses from the hotels in 1971 were $233,000. Andrews attributed the loss to the general economy (a recurrent excuse throughout PSA s recent history) and the construction work being done at the Islandia Hotel and on the BART rapid-transit system near the San Franciscan Hotel. The Holly wood Park Hotel, which was supposed to open in time for the 1973 horseracing season, was delayed by weather and didn't open until the season was three-quarters finished. And the radio stations still had not turned a profit by January. 1972.
The free flow of ready cash became constricted late in 1971, and the company sold 750,000 shares of its stock at twenty-five dollars a share to raise some working capital. It was not enough. In 1972 it sold two Boeing 727- 100s to Mexicana Airlines for more cash, and later that year applied to the PUC for an increase of seventy-five cents per fare.
Finally, the PSA board of directors acted to pull the airline out of its tailspin. In February of 1973, the board created two new positions — chairman of the board and chief executive officer — and installed Andrews in those seats. In doing so, however, they removed Andrews from the presidency and put in his place William Shimp, who began as a pilot with PSA in 1949 and had worked his way up through the ranks to become chief pilot and. later, a company vice president. It was Shimp’s turn to assume a bigger leadership role in the ailing company. But if Andrews' removal from the presidency was a demotion of sorts, old Andy didn't know it. He was still the flamboyant chief of PSA . . . and the worst was yet to come.
There was at least one stabilizing force through the turbulence of PSA’s expansion — pretty women. In the 1950s they were called hostesses; in the 1960s they were stewardesses; and in the 1970s they were flight attendants, and their ranks were entered into by men. But they were always one of the main attractions of the World's Friendliest Airline. The manner in which they were exploited, though, would make even the most mild of feminists shudder today. Here's a scene from 1967: Dozens of PSA and city officials are standing around a large hole at Lindbergh Field where the cornerstone of the new PSA hangar and administration center will soon be built. They watch attentively as several smiling stews pass by the hole, remove a garter from their legs, and toss them ceremoniously down into the pit.
Andrews was not unaware of the effects his stewardesses had on men, and he utilized their beauty to the fullest. In August of 1967, for example, the American Army Helicopter Squadron 174, stationed near Saigon. Vietnam, renamed itself in honor of twenty-three-year-old Judy Bailey, a PSA stew whose picture graced numerous magazine advertisements for the airline. (In the ads. Bailey was shown in her celery-green uniform, holding a sign that read, “Pure, Sober, Available." Beneath her picture was the caption. “I’d like to pin something on you.") Andrew s heard about the helicopter unit‘s affection for the young flight attendant and so flew her to the battlefront to meet them.
PSA's director of stewardesses in 1969 was Nancy Marchand. Marchand was quoted in July of that year as saying that PSA had hired so many pretty girls locally to become stewardesses that San Diego's supply of sweet young things was becoming depleted and that the airline was going to being looking statewide for applicants. “We only hire one of every sixty applicants," Marchand said at the time, “and the average stay is only nine months before a girl marries and quits." (Marchand herself married a PSA pilot a month later and quit the airline.)
The company's women were supposed to look pretty, and that was all. The airline was intolerant of stewardesses who stepped too far out of line — who, in effect, became uppity. In March 1969, two of the company's 400 stewardesses, Elaine Bowen and Edith Field, both of San Diego, were fired for attempting to form a union. They took their case to the National Labor Relations Board, and in March 1970, the board agreed the women were fired illegally and ordered the airline to reinstate them with back pay. (The flight attendants are now unionized by the Teamsters.) This attitude on the part of the company toward its stewardesses apparently did not discourage young women from applying for one of the few openings. In August of 1971, the head of the stewardess department, Dean Hocking, said, “So far this year we have had more than 3800 applications. We have hired fifty-three and that 's all for this year."
Perhaps the most famous uniforms ever worn by any team of flight attendants anywhere were those worn by the PSA women in the early 1970s. The legend relates that in January of 1972, Andrews walked into an upstate airport where a new red carpet had been installed. It struck him that the green uniforms worn by the stews and counter clerks were somewhat boring in comparison to the floor covering on which he was then standing. Ever one to shun anything boring, Andrews ordered modern, new uniforms for the PSA women, to be designed by local uniform designer Barbara Owens. Owens said back then, “I have designed for them pink micro-miniskirts to be worn with strawberry hot pants and red boots and they're really just darling." The color scheme caught on, and by November of 1972, PSA began changing the color of its airplanes from the traditional red and white to the now-recognizable arrangement of tropical-fruit-colored stripes.
PSA reconfirmed its faith in sexy skirts in March 1973, when Owens, of Futura Designs, created the newest stewardess uniform, the seventh in twenty-four years. The minidresses were made of polyester double-knit fabric, and the stews had the option of wearing a dome-shaped or bowler hat. The shoes were chunky-heel platforms. Hocking, the director of the stewardess department, made it plain that the company had no wish to cover up the anatomy of its pretty employees. “We want our girls to maintain the image of young, good-looking California women," he said at the time, “and you can't do that in pantsuits. We want to make sure the aisle seat is always sold." The stewardesses accepted this notion; sometimes, it seemed, too easily. “If we wore pantsuits." said stewardess Lynn Baddeley back then, “there would be a tendency to forget about your shape. But with short dresses, we have to keep the same figures."
The airline hired a new advertising agency (Elsamen, Johns, and Law, in Los Angeles) in November 1976, as it was rebounding from its financial woes of several years earlier. Within three months of the agency assuming the PSA account, the stewardesses had their uniforms changed drastically — from hot pants and miniskirts to a more sedate outfit with a blazer and a skirt that reached clear to the knee. As far as many businessmen were concerned, the go-go airline had stop-stopped.
It was quite apparent, by the first quarter of 1972, that there were too many companies under the ownership of PSA, all with too little control. In April the airline directors formed a holding corporation — to include the airline, the radio stations, and the hotels — and called it PSA. Incorporated. “Basically, it was to keep all the different businesses at arm’s length from each other," says Glitherow. By the following February, Shimp, the new president, could announce that the changeover to PSA. Incorporated, was complete. Shares of PSA stock were immediately converted to shares of PSA. Incorporated. The officers and directors of the airline were now the officers and directors of the holding company.
Shimp told his edgy stockholders in 1973 that the holding company w as created to enable more flexible and economical financial arrangements among the various companies. But as the losses mounted, the shareholders became very nervous. Many of them gained renewed faith in the airline through the calm voice of Shimp.
William Shimp, currently chairman of the board and chief executive officer of PSA, is a native of Moffat, Utah, and early on moved with his family to a ranch in Ontario. Oregon. His interest in aviation was piqued by an uncle, Casey Jones, who ran a flight school in Ontario. The young Shimp learned to fly a Piper Cub from his uncle. He moved with his family to San Diego in 1941 w hen he was seventeen and joined the Army Air Force in 1943, with whom he served a tour of duty in the Pacific. After the war, he was a flight instructor for the Kelly School of Aeronautics at Lindbergh Field. He moved to the other side of the airstrip to join the Friedkin crew three months after Friedkin formed PSA. Shimp was a pilot, first and foremost. He flew the airline’s first DC-3, DC-4s, Electras, and Boeing 727s, from 1949 to 1964, when he began a series of managerial positions. When Shimp was promoted to the presidency of the company in February of 1973, he vainly called PSA’s diversification a success, but added that "the airline comes first."
But Shimp’s rise to power did not silence Andrews, who. in his new role as chief executive officer and chairman of the board, was still calling for expansion. He said in late 1973 that PSA would have to go outside California because there was no more room to expand within the state. At the same time, he admitted that the Ontario-San Francisco route was not making any money, and that the Fresno-Stockton flights were losers.
Certification from the CAB to fly out of state was still far in the future, though, so PSA sought ways to eliminate what competition there was within the state, in the hopes of making its own air routes more profitable. The newest target of PSAs checkbook was another intrastate line that provided much the same service as PSA — Air California.
Air California was part of C. Arnholt Smith’s Westgate-California Corporation. PSA made its first overtures to buy Smith’s eighty-seven percent ownership of the airline as early as 1969. There were protests from other airlines and protests from shareholders who owned portions of the minority interest in Air Cal, and the deal met with delay after delay. In 1973 Smith was having financial difficulties of another sort: his bank, the U.S. National Bank, had failed under suspicious circumstances. Smith was sued by the federal Securities and Exchange Commission for scheming to defraud his Westgate Corporation and his bank.
In the midst of Smith’s financial nightmare, Andrews and PSA served notice, in July of 1973, that the deal was off. Andrews said Smith’s financial difficulties had nothing to do with the cancellation of the merger; rather, he said, there was a threatened lawsuit by the Justice Department which would have cited the merger as a violation of the Clayton Antitrust Act.
Both airlines would have wound up in court had the deal been consummated, and Andrews said his company wanted to avoid a lawsuit. For PSA, it was another deal turned sour.
There was no use in the airline fooling itself any longer as to the success of its diverse holdings. In October 1973, Andrews called the hotel operation “a complete flop." Four months later, PSA contracted with the Hyatt Corporation to manage the Los Angeles, Long Beach, and San Diego hotels, while PSA maintained management of the San Franciscan. Andrews admitted that the hotels had lost two million dollars in 1973. Even so, Andrews said at the time Hyatt took over management, “We’re not looking to get out of the hotel business."
The hotels were draining money from the airline, one of the few profitable ventures of PSA. Incorporated. But when, in 1973, the Arab oil embargo hit the United States, Shell Oil Company, which supplied PSA with its fuel, was mandated by the federal government to cut back its fuel allocation to 1972 levels. The airline cut thirty flights from its daily schedule and laid off 300 employees as a result of the fuel shortage.
Shortly after the lay-off, PSA found itself up against the first strike in its history. Six hundred and twenty maintenance personnel and 700 operations personnel walked off the job on November 16, 1973, in a dispute over wages. The airline managed to keep about half its scheduled flights operating, and Eleanor Glitherow remembers accounting personnel working the counters, and pilots handling bags, as well. The workers, who were represented by the Teamsters, finally went back to their jobs the day before Christmas, 1973, after approving a two-year salary agreement which brought their wages up to industry standards.
Still looking toward that day when PSA jetliners would be crossing the California boundary, the airline took delivery of two Lockheed L-1011 Tri-Stars in 1974. The wide-body aircraft, built to carry 296 passengers, were initially put on the Los Angeles, San Francisco route. But it was a case of bad timing. The L-1011s used excessive amounts of fuel — amounts that were not offset by the larger number of passengers they could carry. The two mammoth jetliners were under PSA's care on a long-term lease agreement which called for the delivery of three more L-1011s. It was obvious to the PSA brass that the airline could not accept more of the unprofitable jets at that time. In fact, it could no longer afford to fly the two it already had. A decision was made to ground the two planes, but even before that was done, the company took an axe to the employee roster.
In the first month of 1975, PSA furloughed one-hundred stewardesses and fifty ramp personnel because of dwindling passenger volume and increased fuel costs. Industry observers, though, noted that none of the other major airlines serving San Diego — Delta. United, Western, and American — laid off any more than two or three part-time workers. In a related move, PSA removed nine seats from each of its nineteen jets, leading to the reduction of one stewardess per flight. Andrews also announced in February of 1975, that the Airline Training Center at Brown Field, where Japanese pilots from All-Nippon Airlines had been trained for several years, would be closed down. In a somewhat understated remark, Andrews said at the time, “I'd like to be optimistic, but it just isn't that time of year."
The airline finally grounded its two L-1011s in April 1975, and retired the two aircraft to a hangar in Arizona; they were never used by PSA again. The company that same year cancelled its order for three more of the jets, setting off a series of lawsuits against PSA by Lockheed.
In March, 1975, the company announced it was seeking buyers for its four hotels and radio stations. Andrews was heard by reporters to mumble something about a “recessionary economy." By the middle of 1975, losses from the hotels were estimated to be one million dollars In May of that year, Andrews announced the company was just hoping to break even financially, but such was not the case. At the end of that disastrous year — after selling three of the radio stations and two of the hotels — PSA’s losses, after taxes, were a staggering $16.7 million.
Although nothing was stated outright, much of the blame for PSA's incredible financial fiasco was laid at the feet of its chief executive officer and chairman of the board, J. Floyd Andrews. The pressure on Andrews to move out of the way grew to such a degree that in March of 1976 he resigned as the company's chief executive officer, Shimp, who had been the company’s president since 1973, was named as Andrews’ successor. Andrews retained his post as chairman of the hoard; his chief task in that position was to lobby in Washington, D C., for CAB approval to fly out of state. It looked to many people in the industry, though, that the fifty-six-year-old Andrews was being put out to pasture. Three months later, in April, Andy Andrews quit the whole show. He resigned as a director and chairman of the board. An unidentified company executive said at the time that “Andy probably just got tired.” Officially, the company denied that Andrews’ departure was anything other than completely voluntary.
PSA estimated in January 1977, that it had lost $18 million on the Lockheed L-1011 Tri-Stars (which was the amount the airline had forfeited on its deposit). And even though Lockheed was able to lease the three unclaimed L-1011s PSA initially contracted to lease, the aircraft builder said it was still going ahead with its lawsuit against PSA for reneging on the lease contract. Two months later. Lockheed filed a $32 million claim against PSA. (PSA filed a counterclaim against Lockheed for $100 million in 1978, and leased back the two grounded L-1011s to Lockheed until 1982.)
Shimp, and everyone else, understood that the L-1011 business was a costly, embarrassing mess, the effects of which would be felt for years. But the concept behind the L-1011 deal — that PSA needed larger aircraft capable of transporting close to 300 passengers cross-country, prior to what it hoped was the inevitable CAB approval to fly out of the state — was a sound one. If there was one thing Andrews had insisted upon, it was that PSA must be prepared to assume the responsibilities of an interstate carrier as soon as CAB approval was made final.
It was with that in mind that the airline ordered ten McDonnell-Douglas Corporation DC-9 Super 80 jetliners in August 1978, at a cost of $180 million. The new twin-engine planes cost $15 million apiece, and the deal included parts worth $30 million. PSA was the first domestic airline to order the super airliners. (It was these DC-9 Super 80s that would partially spark the current strike, two-and-a-half years later.)
Now that the company had gotten rid of most of its subsidiaries, Shimp and the rest of the management tried to tighten up the operation of the airline. New methods of economizing costs were instituted, some with less than successful results.
One former maintenance crewman (called a ramper; his job was to load cargo and baggage and clean the aircraft) recalls several examples of mismanagement in the name of economy. For the sake of this story he will be called Jim Smith. "There are trash bins in the planes on the flight-deck [passenger] level." Smith says, "and they 're dumped after each flight. These planes used to have two toilets in the back, but they took one of them out and put a storage closet in its place. The trash cans were next to the galley, and someone in management came up with the brilliant idea to take the trash cans out of the galley and put them in the storage closet. Why? I don’t know. But then they didn’t even do all the planes the same way, so that in some planes you had trash bins in both the galley and the closet, and. for a while, some of the planes didn't have any bins.’’
Another time, says Smith, someone in management had an idea that there must be an easier way to handle the trash that accumulates on board an aircraft during flight. "The planes have a rear baggage compartment called the pit.’ ’’ says Smith. "They put these huge Dempsey dumpsters down in the pit and connected them to the galley with a long chute. They outfitted twelve aircraft like that last year. Then the FAA [Federal Aviation Administration] came in and said the dumpsters were fire hazards and to remove them.
‘The thing is,’’ continues Smith, "there was this wall separating the executives from the employees. It was like the executives were saying. ‘We’re not messing around anymore.’ But that was so stupid. They just cut off all communication. Like in this dumpster thing; the moment the ground crew' saw it, they said. Why didn’t they ask us?’ It was such an obvious screw-up.”
But even with this wall that many perceived between the management and the employees of PSA, there was a sense that finally, after all these years, the company was back on track. The first strike was behind them. The radio stations were gone and so were the hotels. The L-1011 problem, while far from over, was at least out of the limelight for a while. It seemed that, once again, PSA was an airline.
The morale certainly wasn't at a pinnacle, but the gripes were at a minimum when compared to the hard times of the early- and mid-1970s. It's not unreasonable to think that Captain Jim McFeron was happy in his job. A seventeen-year pilot with PSA, McFeron may have even been whistling as he left his Sacramento hotel room on a clear September morning two years ago and headed for the airport. The Boeing 727-200 was filled with 129 passengers (thirty-nine of whom were PSA employees heading back to work in San Diego) and the six members of the flight crew, including McFeron. “Good morning, ladies and gentlemen," McFeron greeted the passengers. “We're just about cleared for takeoff. We'll be traveling to San Diego with a stop in Los Angeles. The weather in San Diego is clear and warm. Our estimated time of arrival is nine o'clock. I’m Jim McFeron and I'll be your captain today on PSA Flight 182. Enjoy the trip.”
In San Diego, Jim Smith, the ramper, was on the runway. It was his job, along with others, to restock Flight 182 with supplies and to fuel it. Minutes after nine, on that sweltering morning, Smith raised his eyes to the landing approach and saw a brilliant flash in the air. He knew it was a plane going down. “At first we all thought it was a Western flight," he says. “They had a flight that came in at just about the same time. But then word came down almost immediately. It was one of ours." By noon, everyone's worst fears were confirmed. “The worst part of it," says Smith, “was that although you didn’t know exactly which PSA people were on the plane, you knew that you knew them." And says Eleanor Glitherow, “There was just such a terrible sense of helplessness."
The airline did not stop, however. Even as the smoke still rose from the North Park crash site. PSA jets lined the runway for takeoff. Eleanor Glitherow was in charge of fifteen employees from the financial department who manned the telephones to notify the next of kin. The total dead was 144; it was the nation’s worst air disaster up to that time.
To the everlasting credit of the PSA management, no word was mentioned about the financial loss to the company, not for more than a week after the crash. The 727 that had gone down had been purchased in 1968 for five million dollars, but would cost $15 million to replace in 1978. Thousands of dollars were paid out in direct cash payments, also, to cover hotels, meals, travel, and funeral expenses for the families of the dead.
The irony of the disaster is that, for a while, the 4400 employees of the company were once again a family, brought together by the common bereavement of dead friends. “People were told not to talk to the press," remembers Smith, “but it was unnecessary for them to say that because no one really wanted to talk anyway. For a long time everyone seemed to pull together. But that camaraderie began subsiding within a year, when the company started pulling in its slack."
There was good reason for the company “pulling in its slack." The deregulation of the strict CAB guidelines for new interstate carriers had been accomplished in 1978 and PSA was granted approval to fly out of California. PSA inaugurated service on its first interstate flight — San Diego to Las Vegas —on December 15, 1978. The following May, service from Los Angeles to Las Vegas was begun. New out-of-state routes, planned long in advance, began popping up overnight on the PSA schedule — to Reno, to Phoenix. It was the realization of a decade-old dream first pronounced publicly by J. Floyd Andrews in 1967.
But the glory of that triumph was marred by the first serious takeover attempt since the airline's inception. Harold Simmons, a forty-seven-year-old Texan who was president of the Texas-based Valhi Corporation, had not-so-quietly been buying up as much PSA stock as he could lay his hands on since May, 1978. By the first of November, Simmons had amassed twenty percent of the company’s stock at a cost of $12 million. The PSA board of directors saw the power of Simmons's holdings and quickly amended its corporate bylaws to require an eighty percent approval of all the stockholders for any proposed merger by and with “a related person" — that is, anyone who owns twenty percent or more of PSA stock. (The company itself only controlled 14.7 percent.)
The amendment was approved by a majority of the stockholders, but Simmons threatened to fight the legality of the amendment in court. Finally, in February of 1979, Simmons reached an amicable settlement with the airline. Under the agreement, Simmons exchanged 700,000 shares of PSA stock, which represented twenty percent of the stock outstanding, for Jetair Leasing, one of PSA's subsidiaries. The leasing company came with four Boeing 727-200s, and the total value of the leasing company, with planes, was about $16 million.
As if the financial beating PSA took in the Simmons deal weren't bad enough, the Federal Aviation Administration said in June of last year that PSA had the worst safety record of the nation's top eleven airlines (PSA was ranked eleventh in number of passengers served). The rating covered a period of the past five years and concerned itself with violations of safety regulations by flight crews and mechanics. PSA was cited for, among other things, such major infractions as landing on the wrong runway and taking off without clearance, to such smaller misdemeanors as allowing a drunken passenger on board and failure of a pilot to have a valid medical certificate. PSA, with twenty-nine aircraft, was cited for a total of forty-six violations — more than twice as many, in ratio to the number of aircraft, as any other airline in the top eleven.
The safety violations did little to enhance PSA's prestige, nor did the airline’s admission of guilt in the 1978 air disaster. In August of last year, Superior Court Judge Jack Levitt ruled PSA was responsible for the crash. The ruling meant that jury trials in lawsuits resulting from the crash were to be held only for determining the amount of the award the airline must pay. His ruling agreed with the decision of the National Transportation Safety Board, which had ruled earlier that the probable cause of the midair collision was the failure of the PSA flight crew to keep the small Cessna in sight after being warned that the private plane was ahead and below the airliner.
PSA pilots complained to the local media that the company was “throwing the pilots to the wolves.” The pilots felt the airline had done nothing to defend their image in public. Much of their wrath was directed at PSA Chief Pilot John Cowan, who testified that the 182 flight crew had violated professional standards by descending into the area while uncertain as to whether another aircraft was there. The pilots were also upset because PSA chose not to contest the ruling of liability.
Soon the pilots would have another reason to grumble; their union contract was coming up for renewal in January of this year, and the company seemed to be hedging about an early agreement. January came and went without an agreement being signed, and the pilots worked the first nine months of this year without a contract. Negotiations continued off and on between PSA and the Southwest Flight Crew Association.
The basic disagreements were on wages and working conditions. Specifically, the pilots wanted a S96.758 annual salary for the captain of a 727 and $103,523 for the captain of the new DC-9 Super 80s. The company held to its final offer of $87,481 for a captain with twelve years' experience. The pilots also wanted their monthly work schedule reduced from fourteen to twelve days, and wanted a three-man crew in the cockpit of the DC-9s. The company says that aircraft can be flown safely — and indeed other airlines fly them — with only two men in control.
Negotiations between the pilots and the airline finally broke down near the end of August, and a mandatory thirty-day “cooling-off period" went into effect. The pilots finally walked off the job on September 25, the second anniversary of the North Park air disaster, and for the first time in the history of the company, the airline came to a complete halt. All flights were cancelled, passengers were shunted off to competing airlines, and nearly 3000 employees were furloughed for the duration of the strike.
Jim Smith, the ramper who witnessed the crash and who no longer works for the airline, still maintains close friendships with several of the PSA pilots. He contends that the company manipulated the strike so that it would occur at the precise time it did. “Because the airline flies under federal regulations,” Smith says, “there are certain guidelines the company and the union have to follow in wage negotiations. One of those is that there has to be this cooling-off period during which everyone still works. After the cooling-off period, if the union still wants to strike, it can. What PSA did was to start up negotiations, then break them off, then start them up again, so that they could time the cooling-off period just when they wanted it. They manipulated it so that it happened on September 25 for a couple of reasons. First, because the pilots would look really bad to the public by walking out on the anniversary of the crash. The company has all along tried to make the crash look like it was the pilots’ fault. Second, the early fall is traditionally the slowest time of the year for the airline. They had this thing set up months ago.”
Smith is not entirely off base with that estimation. Last July, PSA announced plans to trim its fall schedule by eight percent, bringing total cutbacks for the year to eighteen percent. The company estimated back then that it would have to lay off about 400 of the company’s 4400 employees, mostly pilots, flight attendants, station personnel, and reservationists. The airline also announced over the summer that it would cease operations in three markets by September 17: Reno/ Oakland. Ontario/San Jose, and Ontario/ Oakland. The airline's service to Stockton was planned to be terminated on October 19 because of a fourteen percent drop in passenger traffic.
PSA’s current finances showed strong signs of bouncing back before the strike was called. The year 1979 was PSA’s best, financially, with operating revenues of $335,838,000 and earnings of $23,097, 000. The strike, however, brought to a halt the airline’s recovery. (The airline will still be receiving income, though, through the Airmotive subsidiary, which overhauls jet engines and which can be expected to bring in revenues annually of $40 million, and PSA charter flights, which will bring in about $3.5 million a year. Also, the Airline Training Center the airline owns in Litchfield. Arizona, which trains pilots for Lufthansa and which is wholly unaffected by the strike, is expected to bring in $7.5 million.) The airline has even been rumored to be ready to quit the scheduled airline business and place its total effort behind its subsidiaries. The company denies this.
The few employees who still haunt the hallways and offices of the PSA headquarters at Lindbergh Field once again feel like a family. William Shimp is frequently seen walking up and down the office corridors with questions for his lieutenants. There is once again a feeling of belonging to a small, select group trying to get a job done.
Eleanor Glitherow, sitting in her third-floor office of the headquarters and smoking cigarettes, says the feeling of family-hood never really dissipated completely from that time thirty years ago when the airline had only one leased DC-3. “A lot of the new people came in and acted like working for PSA was just another job to them,” she says. “It was hard to get through to them. But I don't care what anyone says, we’re still a family. When we began to furlough the employees because of the strike, I saw thirty girls in accounting going out in tears because they were laid off, and they were still saying. ‘Thanks for letting us work here.' There's still a family here. It’s just different.”