Hard Landing (91 page)

19.
Lorenzo blew up: Magurno 3/11/94 interview.

20.
arguably more in the interests of Texas Air: The examples of cash and assets taken from Eastern are detailed in “Examiner’s Analysis of Pre-Petition Transactions and Relationships,”
In the Matter of Ionosphere Clubs, Inc.
, U.S. Bankruptcy Court, Southern District of New York, Mar. 1, 1990, and in Petzinger and Thomas,
WSJ
, Apr. 7, 1988.

21.
million … gallons: Based on invoices totaling $19.4 million from April 1987 to December 1988. Report of the Examiner.

22.
commodity markets: “Debtors’ Submission to the Examiner,”
In the Matter of Ionosphere Clubs, Inc.
, Feb. 16, 1990.

23.
People Express notes: The Eastern directors were assured by Texas Air that independent Wall Street investment bankers had found the terms of the sale fair to Eastern; all of the firms in question, however, had a previous relationship with Texas Air. “Examiner’s Analysis,” Mar. 1, 1990.

24.
repaying Texas Air: Magurno 3/11/94 interview. In defending the transaction in Eastern’s bankruptcy proceedings, Texas Air noted that the People Express takeover had “removed the competitive threat People Express … presented to Eastern.” “Debtors’ Submission to the Examiner,” Feb. 16, 1990.

25.
“flipped it”: Plaskett 4/21/93 interview.

26.
only $100 million: A consulting firm provided an after-the-fact opinion to the Eastern board and to a group of Eastern’s creditors affirming the $100 million price as fair, but the opinion was based on a plethora of erroneous assumptions. These are documented at length in “Examiner’s Analysis,” Feb. 16, 1990.

27.
rail strikes: Nielsen,
From Sky Girl to Flight Attendant
, page 26.

28.
cover of
Business Week:
Bakes 9/7/93 interview.

29.
“We don’t acknowledge”: “Texas Air Corp.’s Eastern Unit Seeks Steep Pay Cuts from Machinists’ Union,” by Paulette Thomas,
WSJ
, Oct. 6, 1987.

30.
written record: “American Air, Chief End Antitrust Suit, Agree Not to Discuss Fares With Rivals,”
WSJ
, July 15, 1985.

31.
“very carefully”: D. Reed,
American Eagle
, page 208.

32.
Crandall … was mortified: Though Crandall has never publicly discussed the case, he has made his views known to others, including Plaskett and Becker.

33.
“in my obituary”: Becker 9/3/93 interview; D. Reed,
American Eagle
, page 210.

34.
cosmetic dentistry: Kaldahl 4/27/93 interview; “Battle of Titans: Crandall’s American Is Unlikely Recipient of $8 Billion Trump Bid,” by Bridget O’Brian and Judith Valente,
WSJ
, Oct. 6, 1989.

35.
“rage less”: “American Rediscovers Itself,”
BW
, Aug. 23, 1982.

36.
“I’ve never felt”: Crandall 6/13/94 interview.

37.
burning inside: Plaskett 4/21/93 interview.

38.
discreetly negotiating:
Ibid
.

39.
10 hottest executives: “New Airline Empire Will Test Lorenzo as a Manager,” by Paulette Thomas,
WSJ
, Dec. 26, 1986.

40.
“like a Stradivarius”: “Rescue Party,” by Howard Banks,
Forbes
, Dec. 1, 1986.

41.
slide show: “Continental Air Dismisses Plaskett; Lorenzo to Step In,” by Paulette Thomas,
WSJ
, July 22, 1987.

42.
by the book: “Plaskett Replaced as Continental Chief; Lorenzo Takes Over,”
Aviation Week
, July 27, 1987.

43.
round of golf: Bakes 9/7/93 interview.

44.
“biggest … giveaway ever”: Quoted in “New York Officials Ground Continental Air Giveaway,”
WSJ
, Jan. 29, 1987.

45.
“wanted a scene”: Quoted in
ibid
.

46.
“Frank was adamant”: Plaskett 4/22/93 interview.

47.
the “big bang”: Peterson and Glab,
Rapid Descent
, page 206.

48.
32 different galley: The service breakdown at Continental is detailed in “Texas Air’s Rapid Growth Spurs Surge in Complaints About Service,” by Paulette Thomas,
WSJ
, Feb. 26, 1987, and “Lorenzo Again
Faces Problems at Helm of Continental Airlines,” by Carole A. Shifrin,
Aviation Week
, Aug. 3, 1987.

49.
“never
intentionally
overcommit”: “Flight Ops Pipeline,” Continental Airlines, July 1987. Emphasis added.

50.
Johnson & Johnson: “Lorenzo: In the Cockpit,” interview with Frank Lorenzo,
Time
, Nov. 23, 1987.

51.
“lived through a lot”: Letter to Continental Pilots from Frank Lorenzo, Sept. 11, 1987.

52.
tried to overcome: Plaskett 4/22/93 interview.

53.
dumped Tom Plaskett: Thomas,
WSJ
, July 22, 1987.

54.
they knew would hurt: Baker 4/23/93 interview.

55.
“window of opportunity”: Remarks by Crandall, 1987 Fall Planning Conference, Harvey Hotel, Dallas, Oct. 14, 1987.

56.
15,000 reprints: “Shop Talk: Bookish Airline Is Magazine Fan, Too,” by Francis C. Brown III,
WSJ
, Mar. 3, 1987.

57.
“abusing employees”: Quoted in “Crandall Hits Budget Lines for Cost Cuts at Employees’ Expense,” by Barbara Sturken,
Travel Weekly
, Aug. 12, 1987.

58.
“treat … people dreadfully”: Quoted in “Continental: Full Planes May Not Mean Full Coffers,” by Jo Ellen Davis, James E. Ellis, and Chuck Hawkins,
BW
, Mar. 16, 1987.

59.
“have no chance”: “Chairman of American Airlines Seeks Regulations on Employee Benefits,” by Scott Hamilton,
Airline Executive
, June 1987.

60.
“it wasn’t success”: Quoted in Sturken,
Travel Weekly
, Aug. 12, 1987.

61.
“can’t fix prices”: Quoted in
ibid
.

62.
had a problem: G. Arpey 9/2/93 interview; Kaldahl 4/27/93 interview.

63.
Crandall feared, the door: Crandall 9/1/93 interview.

64.
overpaid for AirCal: Presentation by Frank Lorenzo, Quarterly Pilots’ Meeting, Continental Airlines, Houston Intercontinental Airport, Dec. 2, 1986.

65.
“Lorenzo’s raiders”: Remarks by R. L. Crandall to Sabre Travel Information Network, Apr. 23, 1988.

66.
sum of $250 million: Murray 9/4/93 interview.

67.
“hate to lose”: R. L. Crandall, Address to Sales and Marketing Meeting, Aug. 2, 1988.

68.
replacement altimeters: “Labor-Management Relations in the 1990s: Yesterday’s Tactics With Today’s Psychology and Tomorrow’s Technology,” Texas Air Corp., unpublished monograph, July 13, 1990.

69.
$2 million subsidy: “The Eastern Pilot Group TAC Attack,” presented by Jack Bavis to ALPA Executive Committee, Washington, D.C., Jan. 20, 1987.

70.
inundated with postcards: “ ‘Max Safety’ Shows Little Headroom for Pilot Tolerance,” by Paulette Thomas,
WSJ
, Oct. 28, 1987.

71.
“make Frank … the issue”: Memorandum to Mary Jane Barry and Charlie Bryan from Joe Uehlein and Randy Barber, Feb. 8, 1988.

72.
Jesse Jackson got: Barber 6/21/94 interview; Kenneth M. Jennings, “Union-Management Tumult at Eastern Air Lines: From Borman to Lorenzo,”
Transportation Journal
, Summer 1989.

73.
“full investigation”: House Concurrent Resolution 262, 100th Congress, Mar. 10, 1988.

74.
extremely favorable terms: A new unit of Texas Air proposed to buy the shuttle for $125 million in cash and a note of $100 million. By contrast, when Eastern ultimately did sell the shuttle to Donald Trump, the price was $365 million.

75.
into a stupor: “Airline Backfire: Texas Air Triggered Investigation of Itself with Shuttle Gambit,” by Paulette Thomas, Bob Davis, and John E. Yang,
WSJ
, Apr. 15, 1988.

76.
“noise level”: Frank Lorenzo, Remarks to International Aviation Club, Washington, D.C., May 4, 1988.

77.
“discord and complexity”: Memorandum to the Transportation Secretary from the FAA Administrator, June 1, 1988.

78.
“Nobody’d believe it”: Bryan 5/13/93 interview.

79.
referring to as “D-Day”: Guy Uddenberg, Memo to All Employees, Eastern Air Lines, Toronto, Feb. 1, 1988.

80.
“Eastern goes under”: Olsen 9/2/93 interview.

81.
American’s internal studies: G. Arpey 9/2/93 interview.

82.
Crandall seemed intent: Olsen 9/2/93 interview.

83.
schedules were removed:
Ibid
.

84.
“positioning ourselves”: Olsen 6/10/94 interview.

85.
as mendacious a denial: An American spokesman told the
WSJ
, “This is not part of a strategy aimed at moving in on Eastern or anyone else.” “American Air Will Use Miami as a Crew Base,” by Paulette Thomas,
WSJ
, Aug. 11, 1988.

86.
sense of disconnect: Bakes 9/7/93 interview.

87.
“two scorpions”: Quoted in “Feud Between Bryan, Lorenzo Explains Much, but Not All,” by Bridget O’Brian,
WSJ
, Mar. 6, 1989.

88.
Continental was cratering: Bakes 6/16/94 interview.

89.
about $10 million: The estimate is based on a list of Lorenzo’s stock sales from Sept. 17, 1986, to Sept. 16, 1987, at prices ranging from
$25.88 to $49.25.
Official Summary of Security Transactions and Holdings
, U.S. Securities and Exchange Commission.

90.
had cost $70 million: Estimate based on pre-strike budget data, contained in undated Eastern Air Lines records.

91.
“There’s no way”: J. Arpey 6/16/94 interview.

92.
“When push comes”:
Ibid
.

93.
“The best answer”: Quoted in “Judge Won’t Order Eastern Pilots to End Strike Backing Machinists,”
WSJ
, Mar. 8, 1989.

94.
business textbook: Griffin,
Business
, page 222.

95.
pen in his hand: “Eastern Woos Pilots to Break Planned Strike,” by Bridget O’Brian,
WSJ
, March 2, 1989.

96.
Manhole covers: Peterson and Glab,
Rapid Descent
, page 247.

97.
onto a rooftop: Bakes 6/16/94 interview.

98.
Cable News Network:
Ibid
.

99.
couldn’t “imagine”: Quoted in “A Boss They Love to Hate,” by John Schwartz, Erik Calonius, David I. Gonzalez, and Frank Gibney, Jr.,
Newsweek
, Mar. 20, 1989.

100.
“build the company”: Quoted in “Peripheral Collective Bargaining at Eastern Airlines,” by Kenneth Jennings,
Transportation Journal
, Spring 1990.

101.
meeting in New York: Bakes 9/7/93 interview.

102.
100 cents: Robinson,
Freefall
, page 59.

103.
infuriating Crandall: Reed,
American Eagle
, page 250.

104.
70 boxes: Baker 4/23/93 interview.

105.
“complete shambles”: Crandall 4/23/93 interview.

106.
most profitable piece: Olsen 9/2/93 interview.

107.
“Frank factor”: Plaskett 8/31/93 interview.

108.
“last nickel”: Bakes 6/11/93 interview.

109.
“Any means”: Burr 9/16/93 interview.

110.
“If I were you”: O’Donnell 6/9/94 interview.

111.
five … repayment schemes: “Creditor Group Seeks Trustee for Eastern Air,” by Bridget O’Brian,
WSJ
, Apr. 11, 1990.

112.
“no longer tolerate”: Quoted in
Ibid
.

113.
plundered Eastern: “Report of the Examiner,”
In the Matter of Ionosphere Clubs, Inc.
, U.S. Bankruptcy Court, Southern District of New York, Mar. 1, 1990.

114.
“smacking of fraud”: Quoted in “Answer of the Air Line Pilots Association,”
Application of Friendship Airlines, Inc.
, U.S. Department of Transportation, Docket 48723, Apr. 26, 1993.