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Increasingly fierce competition intensified congestion and stomach-wrenching delays at major airports. Under pres- sure from the Government, the airlines worked out a plan to move about 1,000 flights from peak-hour slots in New York City, Chicago, Atlanta and Denver.
No industry was more transformed in 1984 than telecommunications. In the boldest deregulation experiment of all, the Bell System carried out a courtmandated plan to break up into eight pieces: a shrunken AT&T, which kept its long-distance network, and seven regional companies to provide local service. The immediate results of the split were increased competition and confusion. Long-distance rates fell by 6% as AT&T battled with MCI Communications, GTE Sprint and other rivals. At the same time, though, the average cost of local service rose by 8%. Customers were befuddled by multipage bills, bewildered about whom to call for repairs and bedeviled by delays in the installation of new telephone lines. Said Jack Reiss, 83, a retired salesman in Harrisburg, Pa.: "I don't know why they broke up Ma Bell, but I wish they would put it back together."
For AT&T, which is challenging IBM in the computer business, entry into the competitive world was rough. To cut costs, the company eliminated 11,000 of the 253,000 jobs in its AT&T Technologies branch. The stars of the divestiture were the seven Baby Bell companies. They earned $5 billion in the first nine months of 1984 and were favorites on Wall Street.
Unlike the telecommunications business, the nuclear power industry strained under a yoke of regulation. Ever since the 1979 nuclear accident at the Three Mile Island plant in Pennsylvania, stepped-up safety precautions have made the building of atomic power facilities an increasingly complex and expensive job. Utility companies stopped work on eight nuclear construction projects in 1984. Nuclear woes generated financial difficulties for several utilities, including Long Island Lighting and Consumers Power of Michigan.
The chemical industry had a Three Mile Island of its own when a gas leak at a Union Carbide plant killed some 2,500 people in Bhopal, India. The company faces a flurry of lawsuits that threaten its financial future. In the wake of the disaster, chemical manufacturers will have to take a hard look at safety procedures. Moreover, companies in all kinds of industries will need to examine whether their ways of doing business in foreign countries measure up to their standards at home. Said a shaken Warren Anderson, chairman of Union Carbide: "I think Bhopal has changed the world."
For many executives, the most pressing concern in 1984 was how to keep their companies from being swallowed by takeovers. To escape a bid by T. Boone Pickens Jr., the Texas oilman, Gulf sold itself to Standard Oil of California for $13.2 billion in history's biggest merger. Late in the year Pickens and two partners bought about 6% of the shares of Phillips Petroleum and announced a bid to take control. After several skirmishes in court, Pickens agreed to sell the shares to an underwriting group organized by Phillips for an estimated profit of $89 million.