Former Continental Airlines CEO Frank Lorenzo on the current state of air travel

Written by Brian Bushard

Photography by Kit Noble

N Magazine: One of your biggest deals was the sale of the Eastern Shuttle to Donald Trump. When you look back at that deal, was it the right decision?

Lorenzo: We had started a little airline called New York Air to compete with the Eastern Shuttle in 1980, and that had been gradually eroding the market share of the Eastern Shuttle. We had New York Air giving away bagels and treating people well, back when the Eastern Shuttle was cheap and basic. You came on board the shuttle, you had your credit card, and the flight attendant went up and down with a credit card reader. They didn’t serve anything. The seats were tight. Then we bought control of Eastern and we had to deal with the shuttle. The Eastern Shuttle was separable from Eastern, and there was a lot of cash in it—and Eastern desperately needed cash. That’s the reason for selling the shuttle, and the most obvious person was this guy in New York. Everything that said “New York,” he loved, so I approached him.

N Magazine: What was it like working with Trump?

Lorenzo: We had a normal price negotiation, and then all of a sudden when we came to a deal, the pilot union went on strike. We kept some of the flights going because about a quarter of the pilots didn’t honor the picket line. The traffic on the shuttle dropped. Trump had every right to a force majeure. I called him up, said he was obviously able to back out of the deal, and he said, “Oh no, I love the deal.” We went skiing and I got a call from our general counsel saying, “Guess what, Trump’s announced he wants a lower price on the shuttle deal.” I was really pissed off. We went skiing that day and I flew to New York that night. His office called to renegotiate. I came to Trump and said we had heard he wanted to put in chrome interiors in his airplanes, and chrome interiors take a long lead time to get done. I told him we would add several airplanes to the deal, which were worth very little to us. Trump heard that and said it was great, so we put out a press release saying the deal was done.

N Magazine: How do you feel about the airline industry today?

Lorenzo: Where we are today is not perfect. From a safety point of view, we have done a great job. But we have not kept up with the modernization of our FAA system. The new administration, after these terrible airline accidents particularly at the Ronald Reagan National Airport, knows there needs to be more regulation, particularly around that airport. The National Airport has no right to be having helicopters in a crowded airspace. That was an accident waiting to happen.

N Magazine: Airplane crashes seem to be in the news a lot recently, particularly the fatal crash in India this summer. What do you think can be done to improve airline safety?

Lorenzo: The information is just coming about the incident in India. It’s really too early to know whether there was a maintenance issue, but that plane—the Dreamliner—had been operating for 11 years, so it’s certainly not a problem with the plane. Boeing is doing a very good job following up on airplanes. As we go forward, we talk a lot about having small electric airplanes. Well, who is going to regulate these? How are they going to be tracked down when they’re buzzing around the sky? Anyone of them could bring down an airplane. There’s a lot of work that can be done.

N Magazine: You’re known for the hub-and-spoke model with airlines. We’ve seen recently that some airlines without central hubs can suffer meltdowns. Has the industry learned its lesson?

Lorenzo: You have to look at all the revenue it was bringing in with connecting flights. Southwest Airlines had a different concept entirely from the beginning. They had smaller airplanes, and they came up with the idea of going from important cities to other important cities and basically offering one-stop service. They were very successful with it. They had a great plan for many years. But then, the model shifted and they hadn’t updated their systems. It was only a matter of time until they had a meltdown.

N Magazine: Throughout your career, you have been labeled as a “tough guy.” Do you think that criticism is fair?

Lorenzo: No. We were just responding to airline deregulation. We were just responding to how you could keep a company alive. The unions had come up with this strategy to make Frank Lorenzo the issue. The unions had put together this massive public relations campaign to make Frank Lorenzo out to be this monster that eats his kids for breakfast and employees for lunch. Their argument was always to blame the Frank Lorenzo style of management and that any problems had nothing to do with the deregulation. But we loved our people. In 1983 when the pilots struck us, because we implemented new work groups to save us, we got 22% of the pilots to come back to work—and that 22% could operate 45% of our system. These people that came back to work could see what was going on. They could see Southwest Airlines next door and recognize that we had to change or we weren’t going to stay alive. We weren’t bad guys. We just did what had to be done to save the company, which we did. Otherwise it would have gone the way of Trans World Airlines and Pan Am, and all these other companies that just went by the wayside.

N Magazine: Do you have any predictions about the future of air travel?

Lorenzo: Safety is going to continue to be a major emphasis. We are going to see some new technologies by 2030 and beyond—technologies like electric, smaller aircraft, supersonic airplanes. We are going to see technological changes, but if you think about it, very little has changed in the last 30 years.

N Magazine: What are your tips for air travel?

Lorenzo: Allow plenty of leeway. Allow leeway for the unexpected.



N Magazine: Do you have a favorite airline food?

Lorenzo: Just the snacks. The boxes of snacks these days are pretty good