THE HIGH-FLYING PSA ERA ENDED 35 YEARS AGO

Thirty-five years ago, on May 29, 1987, USAIR Group Inc. completed its $400 million takeover of Pacific Southwest Airlines, the San Diego-based air carrier that began service 38 years before with one leased DC-3 and grew into one of the nation’s largest airlines. From The Tribune, Friday, May 29, 1987:

LOFTY PSA ERA ENDS WITH MERGER INTO USAIR

By Carl Larsen, Tribune Assistant Financial Editor

Pacific Southwest Airlines — San Diego’s hometown airline — quietly was merged into USAIR Group Inc. today, ending a 38-year history as one of the most innovative independent carriers in the United States.

In the end, the airline that pioneered few frills, frequent service and low fares became the victim of its own success.

Other carriers, some sprouting from the seed of airline deregulation and others industry giants with powerful national marketing strategies, eventually pushed PSA into the hands of a merger partner, company executives said.

The $400 million cash transaction turning ownership of PSA over to USAIR was completed in low-key fashion in a Los Angeles law office this morning, said Bill Hastings, spokesman for San Diego-based PSA.

The merger — first announced last Dec. 8 — hung in the balance until May 17, when members of PSA’S Teamsters union local gave final approval to contract changes mandated by USAIR before the deal would go through.

Today, the only official notice of the passage to Usair’s control was a handshake by crews of early-morning USAIR and PSA flights today at a Lindbergh Field departure gate.

Then it was business as usual. Others, however, noted the transition with mixed feelings, realizing that San Diego was losing one of its most visible publicly held companies.

“It’s a sad day,” said Bill Bailey, an advertising executive whose agency formerly handled the PSA account.

“Here’s an airline you could truly call entrepreneurial,” he said. “They didn’t always take the second seat, or say ‘Let’s wait and see how somebody else does it.’ ”

The record will show that PSA ended its corporate life by surviving two major strikes and a disastrous 1970s fling at becoming a conglomerate — operating hotels, rental cars and radio stations.

Ironically, even in its setbacks, PSA was a trend-setter.

Today, management of Allegis Corp. — parent of United Airlines — finds itself facing a possible takeover partly as a result of its following the path PSA did more than a decade ago. Allegis owns the Hertz rental car chain and Westin and Hilton International hotels in addition to United.

PSA also took a financial bath after taking delivery of two Lockheed L-1011 jumbo jets in 1974. The planes, used on San Francisco-los Angeles service, were quickly retired when the airline found it difficult to fill the 296 passenger seats.

In its life, PSA also narrowly beat one takeover attempt and failed in its own attempt to resurrect a bankrupt Braniff Airways through a joint operating agreement.

But in all its history, there is one day that everyone at PSA wishes could be stricken from the record.

That was Sept. 25, 1978, a day of grief that was shared by all San Diegans.

On a crystal-clear morning, a PSA Boeing 727 jetliner collided with a Cessna 172 over North Park, killing 144 people in a disaster that ranks as the city’s worst. Thirty-seven of the victims were PSA employees.

The crash was PSA’S only fatal accident. Over the years, PSA scored its share of “firsts,” including being the first U.S. carrier to fly the Mcdonnell Douglas Super 80, and the first major U.S. airline to fly the British Aerospace 146, a small, quiet jetliner suited to PSA’S corridor routes.

PSA also developed a two-segment approach pattern to cut noise on landing at the urban airports the airline largely serves and was the first to use automated ticketing machines.