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'''Francisco A. "Frank" Lorenzo'''<ref name=savoy>{{cite web |url=http://www.savoycap.com/mgmt.htm |title=Savoy Capital Management |accessdate=2008-07-28}}</ref> (born {{Birth date and age|1940|05|19}}) is an investment manager, [[entrepreneur]], philanthropist, and a former [[airline]] [[CEO]] in the [[United States]]. |
'''Francisco A. "Frank" Lorenzo'''<ref name=savoy>{{cite web |url=http://www.savoycap.com/mgmt.htm |title=Savoy Capital Management |accessdate=2008-07-28}}</ref> (born {{Birth date and age|1940|05|19}}) is an investment manager, [[entrepreneur]], philanthropist, and a former [[airline]] [[CEO]] in the [[United States]]. |
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Since 1990, |
Since 1990, Frank has been chairman of Savoy Capital, Inc., professionally devoted to asset management, private investments and venture capital,<ref name=savoy/> as well as a number of philanthropic activities.{{Fact|date=July 2008}} |
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Born to [[Spain|Spanish]] immigrants in [[Queens]], [[New York]], Lorenzo graduated from [[Columbia University]] in 1961. He had worked his way through [[university]], selling [[necktie]]s, waiting on tables, and driving [[Coca-Cola]] trucks. [[Harvard Business School]] admitted him straight from university. Lorenzo graduated with a [[Master of Business Administration]] (MBA) in 1963 and worked in the [[finance]] divisions of [[Trans World Airlines]] and [[Eastern Air Lines]]. |
Born to [[Spain|Spanish]] immigrants in [[Queens]], [[New York]], Lorenzo graduated from [[Columbia University]] in 1961. He had worked his way through [[university]], selling [[necktie]]s, waiting on tables, and driving [[Coca-Cola]] trucks. [[Harvard Business School]] admitted him straight from university. Lorenzo graduated with a [[Master of Business Administration]] (MBA) in 1963 and worked in the [[finance]] divisions of [[Trans World Airlines]] and [[Eastern Air Lines]]. |
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In 1989 Lorenzo received the [[John Jay]] award for Distinguished Professional Achievement from Columbia University. |
In 1989 Lorenzo received the [[John Jay]] award for Distinguished Professional Achievement from Columbia University. |
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Lorenzo has been both praised and villified for his transformational role during the period when he led [[Texas International Airlines]], [[Texas Air Corporation]], and particularly [[Continental Airlines]] and [[Eastern Airlines]]. The changes forged by Lorenzo and his management team have been seen as catalytic in transforming a once moribund and tradition-bound industry into a more profit-driven, bottom-line oriented one. However, Lorenzo's other legacy--of contentious, combative, and even acrimonious labor relations--has been long lasting. It has been conventional wisdom since the 1980s that the gains in airline industry profitability and capitalization have come at the expense of labor; however, recent scholarship has, at least to some extent, raised questions concerning the factuality of this point of view.<ref name="Pagano">Pagano, Marco and Paolo Volpin, Labor and Finance (draft paper), Università di Napoli Federico II and London Business School, 14 June 2008.</ref> On the other hand, it is indisputable that during the tenure of Lorenzo's successor at Continental, [[Gordon Bethune]], wages increased an average of 25%, and during the same period, airline performance and employee productivty increased to such a degree that Continental went from "worst to first" in the industry, as chronicled in Bethune's 1999 book of the same name.<ref>Bethune, Gordon, From Worst to First: Behind the scenes of Continental's remarkable comeback (ISBN 978-0471356523), Wiley & Sons, 1999.</ref> In light of all the data, it is perhaps most accurately asserted that Lorenzo's methods enabled Continental to survive the initial period of airlne deregulation and consolidation; and that Bethune's methods allowed Continental to become the preeminent trunk airline in the U.S. airline industry. |
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| ⚫ | In 1966 Lorenzo and Harvard classmate Robert J. Carney established an advisory business which provided novel airline management recommendations. In 1969 Lorenzo co-founded an aircraft leasing company called Jet Capital Corporation. In 1972 Jet Capital acquired [[Texas International Airlines]] (TI), a struggling regional carrier, based at [[William P. Hobby Airport]] in [[Houston, Texas]] previously known as Trans-Texas Airways. |
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| ⚫ | Lorenzo pushed new marketing approaches on the U.S. airline industry, including the first regulator approved low fares (first known as "Peanuts Fares" because some were so startlingly low) and other consumer benefits, like being the first carrier to forbid pipe and cigar smoking on airplanes in 1976 and one of the first U.S. airlines to offer fully computerized airport check-in in 1978. |
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Frank Lorenzo's career as an airline executive is, no matter how it is viewed, a testimony to his vision, persistence, and goal-driven opinions of how the airline industry could be changed |
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Lorenzo was active in recruiting a talented and energetic work team. In fact, during the late 1970s, TI was an incubator for much of the talent that would subsequently form the core of other U.S. airlines. Former Lorenzo managers were at some point CEOs, founders, or top executives of existing or new airlines, which included: [[JetBlue]], [[People Express]], [[TWA]], [[New York Air]], [[Midway Airlines]], [[Chicago Air]], [[Presidential]], and others. |
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[[Image:FAA Frank Lorenzo 6336.jpg|thumb|[[Frank Lorenzo]], 1978]] |
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| ⚫ | In 1966 Lorenzo and Harvard classmate Robert J. Carney established an advisory business which provided novel airline management recommendations. In 1969 Lorenzo co-founded an aircraft leasing company called Jet Capital Corporation. In 1972 Jet Capital acquired [[Texas International Airlines]] (TI), a struggling regional carrier, based at [[William P. Hobby Airport]] in [[Houston, Texas]] previously known as Trans-Texas Airways. |
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The combination of cost rationalization with marketing, pricing, and service innovations returned TI to profitability and in 1977, Lorenzo was awarded the ''[[Aviation Week|Aviation Week and Space Technology]]'' Laureates Award during an event held at the [[Smithsonian Institution]]'s [[National Air and Space Museum]]. |
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| ⚫ | Lorenzo pushed new marketing approaches on the U.S. airline industry, including the first regulator approved low fares (first known as "Peanuts Fares" because some were so startlingly low) and other consumer benefits, like being the first carrier to forbid pipe and cigar smoking on airplanes in 1976 and one of the first U.S. airlines to offer fully |
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[[Image:Texas International.jpg|thumb|250px|left|A [[McDonnell Douglas]] [[DC-9]]-15 in Mexico in 1976.]] |
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Lorenzo was active in recruiting a talented and energetic management team. In fact, during the late 1970s, TI was an incubator for much of the talent that would subsequently form the core of other U.S. startup airlines. Former Lorenzo managers were at some point CEOs, founders, or top executives of existing or new airlines, which included: [[JetBlue]], [[People Express]], [[TWA]], [[New York Air]], [[Midway Airlines]], [[Chicago Air]], [[Presidential]], and others. Although only [[JetBlue]] exists today in its originally constituted form, each of these airlines presaged industry trends which would come to dominate the industry scene, and each was based on concepts that have come to characterize the operational, fincancial, pricing, and route concentration patterns of today's U.S. airline industry.<ref name="Scott"/> The combination of cost rationalization with marketing, pricing, and service innovations returned TI to profitability and in 1977, Lorenzo was awarded the ''[[Aviation Week|Aviation Week and Space Technology]]'' Laureates Award during an event held at the [[Smithsonian Institution]]'s [[National Air and Space Museum]]. |
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[[Image:NAL.DC-10.jpg|thumb|right|[[National Airlines (NA)|National Airlines]] DC-10, Houston (IAH), 1978]] |
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In the autumn of 1978, TI management attempted a tender offer acquisition of trunkline [[National Airlines (NA)|National Airlines]]. National, with headquarters in [[Miami]] and hubs there and in [[New Orleans]], [[Houston]], and [[Los Angeles]], would have allowed tiny Texas International to expand substantially beyond its south-central U.S. area of service. National had strength in the north-south market along the east coast, and probably the strongest east-west routes along the southern tier. National, however, fought the acquistion stubbornly, and finally consummated a merger with [[Pan American World Airways|Pan Am]], who had emerged as a 'white knight' during the takeover battle. Most industry analysts believe that Pan Am paid too high a price for National, and was ill prepared to integrate National's domestic route network with Pan Am's own globe-girdling international network. The cultures of National and Pan Am also proved to be incompatible, making workforce integration difficult. Texas International walked away from their foiled attempt with a multi-million dollar stock profit; however, and was well poised for Lorenzo's next ventures--a startup airline in the high-density East coast corridor, and subsequent acquistion of Continental Airlines.<ref name="Scott"/> Lorenzo was the first person ever in the history of the US to be banned from aviation by Congress. He is single-handedly responsible for more job loss in aviation than any event in history. |
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In 1980 Lorenzo created a holding company for TI called [[Texas Air]] Corporation. Shortly after forming Texas Air, Lorenzo started a new airline called [[New York Air]] (NYA), the first post-deregulation airline. New York Air was based at New York's [[LaGuardia Airport]], very near the Queens neighborhood where Lorenzo grew up. New York Air would become Lorenzo's challenge to the expensive Eastern Airlines Shuttle, and provided cheaper and more frequent (hourly) flights between New York, Boston and Washington-National. The ALPA pilots' union fought it vigorously. |
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===Texas Air Corporation creates New York Air=== |
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[[Image:23368 NewYorkAir DC9.jpg|thumb|right|[[New York Air]] DC-9s, LaGuardia Airport, New York, 1984.]] |
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In 1980 Lorenzo created a holding company for TI called [[Texas Air Corporation]]. In the autumn of 1980, Texas Air created a new airline called [[New York Air]] (NYA), the first post-deregulation airline (see [[Airline Deregulation Act of 1978]]). New York Air was based at New York's [[LaGuardia Airport]], very near the Queens neighborhood where Lorenzo had been raised. New York Air would become Lorenzo's challenge to the expensive and near-monopoly [[Eastern Airlines Shuttle]], and provided cheaper and equally frequent (hourly) flights between New York, Boston and Washington-National. The [[Airline Pilots Association|ALPA]] pilots' union fought New York Air vigorously, running picket lines at [[LaGuardia]] and [[Washington Reagan National Airport|Washington National]] and taking out critical ads in the New York newspapers. Suspected acts of vandalism, interference, and prohibited aircrew operations against NYA were reported by New York Air flight crews and managers. New York Air's representatives to the [[Airline Scheduling Committees]] ([[U.S. Department of Transportation|DOT]]-authorized committees of airline representatives that allocated takeoff and landing slots at capacity-controlled airports in New York, Washington, and Chicago) were stonewalled for months as they sought to get the necessary 'slots' for New York Air to operate its shuttle services between [[New York]], [[Washington]], and [[Boston]]. Eventually, however, the airline succeeded in overcoming all obstacles. New York Air service commenced on 19 December 1980 with shuttle operations between New York [[New York-LaGuardia|LaGuardia]], Washington [[Washington National Airport|National]], and Boston [[Boston Logan Airport|Logan]] airports. <ref name="Scott"/> |
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| ⚫ | New York Air grew rapidly, adding scheduled services from LaGuardia to |
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===Continental Airlines=== |
===Continental Airlines=== |
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In 1981 Texas Air |
In 1981 Texas Air initiated the takeover of [[Continental Airlines]]. Texas International was merged into Continental Airlines in June 1982. TI ceased to exist and the "new Continental" relocated its headquarters to Houston. Lorenzo was determined to build Continental into a low-cost full-frills airline, focusing on profitable routes, in order to reach sustainability in the new free-for-all deregulated marketplace. |
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| title = Continental Air Chief Dies, Apparent Suicide |
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| work = New York Times |
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| date = 1981-08-10 |
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| accessdate = 2008-07-16 |
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| url = http://query.nytimes.com/gst/fullpage.html?sec=health&res=9C02E0D9143BF933A2575BC0A967948260 |
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}}</ref> In the end, Texas Air Corp. prevailed. Frank Lorenzo became Continental's Chairman and CEO in the autumn of 1981. |
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| ⚫ | Lorenzo took Continental into [[Chapter 11]] [[bankruptcy]] in September 1983 after extensive negotiations with labor unions proved unsuccessful. Bankruptcy, up to 1984, allowed immediate cessation of union contracts and imposition of new labor conditions, subject to later Court approval and revision. A more streamlined Continental emerged out of bankruptcy shortly after the original filing and the Bankruptcy Court approved management's measures. |
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[[Image:8131 CAL B747 DEN.jpg|thumb|left|Continental Airlines [[Boeing 747]], Denver, 1978]] |
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[[Image:IAH Aerial.jpg|thumb|left|Continental is the dominant operator at [[Houston Intercontinental Airport]]]] |
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[[Texas International]] was merged into Continental Airlines in June 1982. TI ceased to exist and the "new Continental" relocated its headquarters to [[Houston]]. The merger resulted in a large expansion of Continental's hub at [[Houston Intercontinental Airport]] and its extensive routes to Mexico. Lorenzo was determined to build Continental into a low-cost full-service airline, focusing on profitable routes, in order to reach sustainability in the new free-for-all deregulated marketplace.<ref name="Buckley">Buckley, William F. Jr., [5] Frank Lorenzo & the free market in National Review, September 17, 1990.</ref><ref name="Scott"/> |
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| ⚫ | Lorenzo took Continental into [[Chapter 11]] [[bankruptcy]] in September 1983 after extensive negotiations with labor unions |
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Union fury against this provision of bankruptcy law resulted in Congressional action prohibiting the voiding of labor contracts by airlines in bankruptcy. However, the law was too late to affect Continental's cost cutting changes that rescuted it from liquidation.<ref name="Scott">filler</ref><ref name="Buckley">filler</ref><ref name="Delaney">Delaney, Kevin J., Strategic Bankruptcy: How Corporations and Creditors Use Chapter 11 to Their Advantage (ISBN 0-520-07359-2), University of California Press, 1999.</ref> |
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| ⚫ | PeopleExpress placed the highest bid and paid a substantial premium for Frontier's high-cost operation. On [[August 24]], [[1986]] Frontier filed for bankruptcy and ceased operations. Texas Air acquired PeopleExpress on [[September 15]], [[1986]], at the same time gaining Frontier, which reinforced Continental's already formidable Denver hub. |
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A more streamlined Continental emerged only a few days after the filing for bankruptcy (Continental has the distinction of being the first U.S. airline to fly through bankruptcy). Much of the airline was liquidated and Continental was rebranded as a low-cost carrier. Continental was also forced to abandon its hub in Los Angeles although it maintained its Denver, Chicago, Houston, and South Pacific routes.<ref name="Scott"/> |
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Shortly after the original filing, the Bankruptcy Court approved management's measures; however, terse and sometimes contentious labor relations persisted at Continental for some time, and airline historians have noted that the period from 1984-1994 represented an historical anomaly for Continental: a period of low morale and material deterioration of customer service.<ref name="Scott"/> These problems would only be remedied after the assumption of the helm at Continental by a new CEO, former Boeing executive [[Gordon Bethune]], in 1994.<ref name="Buckley"/><ref name="Scott"/> |
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===Eastern Air Lines=== |
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In 1990, Frank Lorenzo retired after 18 years at the helm of Texas International and later Texas Air and [[Continental Airlines]], selling the majority of his Jet Capital Corporation to [[Scandinavian Airlines System]] (SAS). According to William F. Buckley, in his September 17, 1990 article on [[National Review]], the sale to SAS was conditioned on Lorenzo leaving the company.<ref name="Buckley"/> Shortly after Lorenzo retired, Continental filed for its second bankruptcy in a decade. There were a number of circumstances underlying the second bankruptcy, perhaps most importantly: Lorenzo had dedicated himself almost full time to the [[Eastern Air Lines]] acquisition and labor relations issues; the 1990 Iraqi invasion of Kuwait and the resultant Gulf War had resulted in a dramatic increase in the price of jet fuel; and acquired carrier [[People Express]] had been highly leveraged at the time of its merger with Continental, PE having purchased Frontier Airlines just two years before for an inflated price--the added debt burden weighed heavily on Continental.<ref name="Buckley"/><ref name="Scott"/> During his eighteen year tenure with [[Texas International Airlines|TI]]/[[Texas Air Corporation|Texas Air]]/[[Continental Airlines|Continental]], Lorenzo's stake grew from 15 jet-and-turboprop aircraft and revenues of $73 million, to 350 jet aircraft and revenues of over $5 billion; and, whether viewed as for better or worse, the airline industry has never been the same. |
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Lorenzo pursued negotiations with another troubled carrier that suffered the deregulation marketplace, Eastern Air Lines. Texas Air acquired Eastern on [[February 24]], [[1986]] and started working on its turnaround and possible integration with Continental. |
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| ⚫ | Some of Eastern's assets were used to create a world-wide reservation system, System One, and Continental's hub at Newark Airport. Lorenzo divested non strategic assets such as the Eastern Shuttle, which was sold to [[Donald Trump]], and the South American route system, sold to [[American Airlines]]. |
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| ⚫ | In 1985, Texas Air attempted a [[takeover]] of |
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| ⚫ | The machinists', flight attendants', and pilot unions struck in 1989. On [[3 March]] [[1989]], President [[George H. W. Bush]] issued a statement outlining his decision not to act on a [[National Mediation Board]] recommendation to appoint a presidential emergency board to attempt to reach a labor agreement.<ref>"Statement on the Labor Dispute Between Eastern Airlines and the International Association of Machinists and Aerospace Workers" John T. Woolley and Gerhard Peters,The American Presidency Project [online]. Santa Barbara, CA: University of California (hosted), Gerhard Peters (database). http://www.presidency.ucsb.edu/ws/?pid=16726</ref> In addition, a Congressional bill designed to establish a commission specifically to "investigate the labor dispute"<ref>H.R. 1231, To establish a commission to investigate and report respecting the dispute between Eastern Airlines and its collective bargaining units, and for other purposes. [http://thomas.loc.gov/cgi-bin/query/z?c101:h.r.1231.enr:]</ref> was vetoed by Bush on [[21 November]] [[1989]];<ref>Bush, George H. W.. "George Bush Presidential Library and Museum :: Public Papers - 1989 - November." George Bush Presidential Library and Museum. 21 November 1989. http://bushlibrary.tamu.edu/research/public_papers.php?id=1247&year=1989&month=11.</ref><ref>"ESTABLISHING EASTERN AIRLINES LABOR DISPUTES EMERGENCY BOARD--VETO MESSAGE FROM THE PRESIDENT OF THE UNITED STATES (H. DOC. NO. 101-116) (House of Representatives - [[November 21]], [[1989]])" [http://thomas.loc.gov/cgi-bin/query/R?r101:FLD001:H09625:]</ref> the veto was sustained by the [[United States House of Representatives|House of Representatives]] on [[7 March]] [[1990]].<ref>{{cite web |author=Pytte, Alyson |title=LABOR: House Sustains Bush's Veto Of Eastern Strike Measure |publisher=[[CQ Weekly]] Online |date=1990-03-10 |p=745-745 |url=http://library.cqpress.com/cqweekly/WR101408719 |accessdate=2008-01-20}}</ref> The Bankruptcy Court named a trustee to run Eastern in April, 1990. Eastern ceased operations on [[18 January]] [[1991]] and its assets were liquidated.<ref>{{cite news |author=Salpukas, Agis |title=Eastern Airlines Is Shutting Down And Plans to Liquidate Its Assets | url=http://query.nytimes.com/gst/fullpage.html?res=9D0CEEDC1138F93AA25752C0A967958260&sec=&spon=&pagewanted=print |date=1991-01-19 |accessdate=2008-07-28}}</ref> |
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[[Image:31186_FL_B737_STL_proctor.jpg|thumb|right|Frontier Airlines Boeing 737, St. Louis, 1985]] |
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===Divestiture from Continental=== |
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In 1990, after having been CEO of Continental and Texas International for 18 years, Mr. Lorenzo sold his controlling interest in Continental Airlines to [[Scandinavian Airlines System]], and stepped down from his CEO role to pursue other entrepreneurial and investment ventures. During his eighteen year tenure, the airline grew from 15 jet aircraft and revenues of $73 million, to 350 jet aircraft and revenues of over $5 billion. |
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| ⚫ | PeopleExpress placed the highest bid and paid a substantial premium for Frontier's high-cost operation. On [[August 24]], [[1986]] Frontier filed for bankruptcy and ceased operations. Texas Air acquired PeopleExpress on [[September 15]], [[1986]], at the same time gaining Frontier, which reinforced Continental's already formidable Denver hub. |
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| ⚫ | Lorenzo is a trustee of [[The Hispanic Society of America]], an institution with a free-entrance museum of Art. The museum is located in NY, and houses the largest collection of Spanish art outside Spain, with major paintings by [[Diego Velázquez|Velázquez]], [[Goya]], [[Zurbarán]], [[El Greco]], and [[Sorolla]]. |
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He is additionally a trustee of the Woodrow Wilson National Fellowship Foundation located in Princeton, New Jersey. |
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Lorenzo is also involved as an director, donor, or advisor to several additional arts and charitable organizations, including the International Advisory Board of [[Catalonia]], Spain. |
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| ⚫ | Lorenzo is a trustee of [[The Hispanic Society of America]], an institution with a free-entrance museum of Art. The museum is located in |
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==References== |
==References== |
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[[Category:Spanish-Americans]] |
[[Category:Spanish-Americans]] |
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[[Category:Columbia University alumni]] |
[[Category:Columbia University alumni]] |
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[[Category:Harvard Business School alumni]] |
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[[Category:Living people]] |
[[Category:Living people]] |
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[[Category:1940 births]] |
[[Category:1940 births]] |
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[[de:Frank Lorenzo]] |
[[de:Frank Lorenzo]] |
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[[ja:フランク・ロレンツォ]] |
[[ja:フランク・ロレンツォ]] |
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Revision as of 20:14, 3 February 2009
Francisco A. "Frank" Lorenzo[1] (born May 19, 1940) is an investment manager, entrepreneur, philanthropist, and a former airline CEO in the United States.
Since 1990, Frank has been chairman of Savoy Capital, Inc., professionally devoted to asset management, private investments and venture capital,[1] as well as a number of philanthropic activities.[citation needed]
Born to Spanish immigrants in Queens, New York, Lorenzo graduated from Columbia University in 1961. He had worked his way through university, selling neckties, waiting on tables, and driving Coca-Cola trucks. Harvard Business School admitted him straight from university. Lorenzo graduated with a Master of Business Administration (MBA) in 1963 and worked in the finance divisions of Trans World Airlines and Eastern Air Lines.
In 1989 Lorenzo received the John Jay award for Distinguished Professional Achievement from Columbia University.
Continental Airlines
Pre-deregulation and Texas Air
In 1966 Lorenzo and Harvard classmate Robert J. Carney established an advisory business which provided novel airline management recommendations. In 1969 Lorenzo co-founded an aircraft leasing company called Jet Capital Corporation. In 1972 Jet Capital acquired Texas International Airlines (TI), a struggling regional carrier, based at William P. Hobby Airport in Houston, Texas previously known as Trans-Texas Airways.
Lorenzo pushed new marketing approaches on the U.S. airline industry, including the first regulator approved low fares (first known as "Peanuts Fares" because some were so startlingly low) and other consumer benefits, like being the first carrier to forbid pipe and cigar smoking on airplanes in 1976 and one of the first U.S. airlines to offer fully computerized airport check-in in 1978.
Lorenzo was active in recruiting a talented and energetic work team. In fact, during the late 1970s, TI was an incubator for much of the talent that would subsequently form the core of other U.S. airlines. Former Lorenzo managers were at some point CEOs, founders, or top executives of existing or new airlines, which included: JetBlue, People Express, TWA, New York Air, Midway Airlines, Chicago Air, Presidential, and others.
The combination of cost rationalization with marketing, pricing, and service innovations returned TI to profitability and in 1977, Lorenzo was awarded the Aviation Week and Space Technology Laureates Award during an event held at the Smithsonian Institution's National Air and Space Museum.
New York Air
In 1980 Lorenzo created a holding company for TI called Texas Air Corporation. Shortly after forming Texas Air, Lorenzo started a new airline called New York Air (NYA), the first post-deregulation airline. New York Air was based at New York's LaGuardia Airport, very near the Queens neighborhood where Lorenzo grew up. New York Air would become Lorenzo's challenge to the expensive Eastern Airlines Shuttle, and provided cheaper and more frequent (hourly) flights between New York, Boston and Washington-National. The ALPA pilots' union fought it vigorously.
New York Air grew rapidly, adding scheduled services from LaGuardia to Cleveland, Buffalo, Detroit, Louisville, and other cities, before eventually being folded into today's Continental Airlines.
Continental Airlines
In 1981 Texas Air initiated the takeover of Continental Airlines. Texas International was merged into Continental Airlines in June 1982. TI ceased to exist and the "new Continental" relocated its headquarters to Houston. Lorenzo was determined to build Continental into a low-cost full-frills airline, focusing on profitable routes, in order to reach sustainability in the new free-for-all deregulated marketplace.
Lorenzo took Continental into Chapter 11 bankruptcy in September 1983 after extensive negotiations with labor unions proved unsuccessful. Bankruptcy, up to 1984, allowed immediate cessation of union contracts and imposition of new labor conditions, subject to later Court approval and revision. A more streamlined Continental emerged out of bankruptcy shortly after the original filing and the Bankruptcy Court approved management's measures.
In 1985, Texas Air attempted a takeover of Trans World Airlines. Although TWA's management favored Lorenzo over Carl Icahn, TWA's unions feared Lorenzo and negotiated special concessions with Icahn. TWA's Board eventually accepted Icahn's offer.
Frontier and People Express
In 1985, Lorenzo's Texas Air Corp. made an offer for a Denver-based regional carrier, Frontier Airlines, opening a bidding war with People Express, which was headed by Lorenzo's former TI associate Don Burr.
PeopleExpress placed the highest bid and paid a substantial premium for Frontier's high-cost operation. On August 24, 1986 Frontier filed for bankruptcy and ceased operations. Texas Air acquired PeopleExpress on September 15, 1986, at the same time gaining Frontier, which reinforced Continental's already formidable Denver hub.
On February 1, 1987, People Express, New York Air, and several commuter carriers were merged into Continental Airlines to create the sixth largest airline in the world.
Eastern Air Lines
Lorenzo pursued negotiations with another troubled carrier that suffered the deregulation marketplace, Eastern Air Lines. Texas Air acquired Eastern on February 24, 1986 and started working on its turnaround and possible integration with Continental.
Some of Eastern's assets were used to create a world-wide reservation system, System One, and Continental's hub at Newark Airport. Lorenzo divested non strategic assets such as the Eastern Shuttle, which was sold to Donald Trump, and the South American route system, sold to American Airlines.
The machinists', flight attendants', and pilot unions struck in 1989. On 3 March 1989, President George H. W. Bush issued a statement outlining his decision not to act on a National Mediation Board recommendation to appoint a presidential emergency board to attempt to reach a labor agreement.[2] In addition, a Congressional bill designed to establish a commission specifically to "investigate the labor dispute"[3] was vetoed by Bush on 21 November 1989;[4][5] the veto was sustained by the House of Representatives on 7 March 1990.[6] The Bankruptcy Court named a trustee to run Eastern in April, 1990. Eastern ceased operations on 18 January 1991 and its assets were liquidated.[7]
Divestiture from Continental
In 1990, after having been CEO of Continental and Texas International for 18 years, Mr. Lorenzo sold his controlling interest in Continental Airlines to Scandinavian Airlines System, and stepped down from his CEO role to pursue other entrepreneurial and investment ventures. During his eighteen year tenure, the airline grew from 15 jet aircraft and revenues of $73 million, to 350 jet aircraft and revenues of over $5 billion.
Investment Manager
After the sale of his interest in Continental, Lorenzo founded Savoy Capital, Inc. in 1990 in Houston, TX.[1] Savoy is a private investment firm largely investing for its own account, but which also invests on behalf of accredited outside investors.
Philanthropy
Lorenzo is a trustee of The Hispanic Society of America, an institution with a free-entrance museum of Art. The museum is located in NY, and houses the largest collection of Spanish art outside Spain, with major paintings by Velázquez, Goya, Zurbarán, El Greco, and Sorolla.
He is additionally a trustee of the Woodrow Wilson National Fellowship Foundation located in Princeton, New Jersey.
Lorenzo is also involved as an director, donor, or advisor to several additional arts and charitable organizations, including the International Advisory Board of Catalonia, Spain.
References
- ^ a b c "Savoy Capital Management". Retrieved 2008-07-28.
- ^ "Statement on the Labor Dispute Between Eastern Airlines and the International Association of Machinists and Aerospace Workers" John T. Woolley and Gerhard Peters,The American Presidency Project [online]. Santa Barbara, CA: University of California (hosted), Gerhard Peters (database). http://www.presidency.ucsb.edu/ws/?pid=16726
- ^ H.R. 1231, To establish a commission to investigate and report respecting the dispute between Eastern Airlines and its collective bargaining units, and for other purposes. [1]
- ^ Bush, George H. W.. "George Bush Presidential Library and Museum :: Public Papers - 1989 - November." George Bush Presidential Library and Museum. 21 November 1989. http://bushlibrary.tamu.edu/research/public_papers.php?id=1247&year=1989&month=11.
- ^ "ESTABLISHING EASTERN AIRLINES LABOR DISPUTES EMERGENCY BOARD--VETO MESSAGE FROM THE PRESIDENT OF THE UNITED STATES (H. DOC. NO. 101-116) (House of Representatives - November 21, 1989)" [2]
- ^ Pytte, Alyson (1990-03-10). "LABOR: House Sustains Bush's Veto Of Eastern Strike Measure". CQ Weekly Online. p. 745-745. Retrieved 2008-01-20.
- ^ Salpukas, Agis (1991-01-19). "Eastern Airlines Is Shutting Down And Plans to Liquidate Its Assets". Retrieved 2008-07-28.
- Roy Rowan From Mao to Now, a reporter's fifty-year pursuit of Powerful People (ISBN 0-7867-0312-1), Carroll & Graf Publishers, Inc.
- Buckley, William F. Jr., Frank Lorenzo & the free market in National Review, September 17, 1990
- The Handbook of Texas. Texas Air.