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Hard Landing

Page 65

by Thomas Petzinger, Jr.


  54. potential buyers: Borman 1/19/94 interview.

  55. “loony tunes”: Ibid.

  56. “What do you think?”: Bakes’s conversations with Lorenzo, and Lorenzo’s state of mind, were described in the Bakes 6/11/93 interview; Deposition of Phillip [sic] Bakes, Air Line Pilots Association v. Eastern Air Lines, U.S. District Court for the District of Columbia, Civil Action No. 87-2002, Aug. 10, 1988, as well as numerous public comments by Lorenzo.

  57. remotely plausible: “Sabre Rattling,” Economist, Nov. 7, 1987.

  58. Borman had known … Winpisinger: Borman, Countdown, passim.

  59. “Charlie hears voices”: Quoted in Borman, Countdown, page 377. Winpisinger confirms making the remark.

  60. bulletproof vest: Borman 1/19/94 interview.

  61. Bryan … was vomiting: Bryan 5/13/93 interview.

  62. pondered the variables: Ibid; Barber 6/21/94 interview.

  63. On Sunday: The account of the fateful Eastern board meeting is based, among other sources, on copious contemporaneous notes by Randy Barber, who was an eyewitness to many of the events, as well as on a 23-page monograph written by Barber on Mar. 7, 1986; on the Borman 1/19/94 interview; the Bryan 5/13/93 interview; the Magurno 3/11/94 interview; Borman, Countdown; Bernstein, Grounded; and the first in-depth published account of the meeting, “Classic Mistake: Eastern Air’s Borman Badly Underestimated Obduracy of Old Foe,” by Gary Cohn, WSJ, Feb. 25, 1986.

  64. track down someone: Magurno 3/11/94 interview.

  65. “change his mind”: Barber notes.

  66. Borman pulled Bryan: Ibid.

  67. offered a proposal: Bryan 5/13/93 interview.

  68. “What’s going on?”: The account of the phone conversation is based on the Bryan 5/13/93 interview; the Borman 1/19/94 interview; and Borman, Countdown, pages 430-31. Winpisinger confirms the gist of the conversation and provided some details.

  69. “you destroyed this airline”: The exchange is based on the Barber notes. A similar account appeared in Cohn, WSJ, Feb. 25, 1986.

  70. clients some comfort: Magurno 3/11/94 interview.

  71. “Hold it!”: Bryan 5/13/93 interview.

  72. “Bryan’s offer”: Borman, Countdown, page 435.

  73. in the open: Ibid.

  74. “Any allegation”: Ibid.

  75. “Don’t you agree”: Magurno 3/11/94 interview.

  76. “submit my resignation”: Borman, Countdown, page 436.

  77. “volunteering to leave”: Barber notes.

  78. “promises are no good”: Barber monograph, Mar. 7, 1986.

  79. “They did it!”: Barber notes.

  80. “sorry to tell you”: Quoted in Bernstein, Grounded, page 50.

  81. tears streaming: Babbitt 8/26/94 interview.

  82. “I’m sorry”: Ibid.

  83. “might be surprising”: Quoted in “Editorial: The Eastern Strike,” by James Woolsey, Air Transport World, May 1989.

  84. never receive an answer: Bernstein, Grounded, page 53.

  85. “union buster”: A transcript of the press conference appears in the Falcon, Eastern Air Lines, Mar. 5, 1986.

  86. Colonel wanted … to remain: Borman 1/19/94 interview.

  87. No, Lorenzo said: Ibid.

  88. sick to his stomach: Bakes 6/16/94 interview.

  89. a cesspool: Ibid.

  90. reputation had suffered: Bakes 6/11/93 interview.

  91. “got to have a meeting”: Bakes 9/7/93 interview.

  92. “Get to the point!:” An account of the exchange appears in the IAM District 100 newsletter of Jan. 12, 1987.

  93. sat down with Lorenzo: Memo to file from David Kunstler, Eastern Air Lines, July 22, 1986.

  Chapter 12: Nosedive

  1. “I’ll shoot you!”: Burr 9/16/93 interview.

  2. In the New York area: “Rapid Ascent: People Express Flies into Big Time in Just Three Years Aloft,” by William M. Carley, WSJ, Mar. 30, 1984.

  3. Hundreds of passengers: The scene is described in “That Daring Young Man and his Flying Machines,” by Lucien Rhodes, Inc., Jan. 1984.

  4. “High growth is important”: Quoted in “Arrant Burr,” by James K. Glassman, New Republic, Oct. 6, 1986.

  5. “two bull elephants”: Quoted in “People Express’s Newark-Chicago Entry Underscores Shift in Strategy of Carrier,” by William M. Carley, WSJ, Aug. 9, 1984.

  6. 6,000 potential passengers: Carley, WSJ, Mar. 30, 1984.

  7. Burr … finally got religion: Burr 9/17/93 interview.

  8. “mini-Manhattan Project”: Ibid.

  9. “a dry hole”: Ibid.

  10. “give a shit”: Ibid.

  11. little rhyme and reason: People Express Airlines: Rise and Decline, Harvard Business School Case No. N9-490-012, Mar. 1, 1990.

  12. evaluated against the Precepts: Burr 9/17/93 interview.

  13. from The Greatest: Harvard Business School Case, Mar. 1, 1990.

  14. shoes and socks removed: Ibid.

  15. “personally and painfully”: Quoted in Ibid.

  16. “brought together”: Quoted in Ibid.

  17. Crandall had not forgotten: Crandall 4/23/93 interview.

  18. nearly 1,500 departures: “Revenue Control: Mining Gold at the Margin,” by Samuel M. Fuchs, Airline Executive, Jan. 1987.

  19. assigned to Barbara R. Amster: Amster 4/29/93 interview.

  20. had to be eradicated: Crandall 4/23/93 interview; “American on the Offensive,” Financial World, Feb. 20, 1985; “American Tries to Muscle In on the Low-Cost Carriers,” by Reggi Ann Dubin, BW, Feb. 4, 1985.

  21. Crandall was concerned: Crandall remarks to 1985 Fall Planning Conference, American Airlines, draft dated Sept. 26, 1985.

  22. “brains of Southwest”: Amster 4/29/93 interview.

  23. “devised the fare”: Carty 4/29/93 interview.

  24. new pricing strategy: “American Airlines Slashes Fares on Many Routes; Industry Stock Prices Slip as Rival Carriers Follow,” by Laurie P. Cohen, WSJ, Jan. 18, 1985.

  25. Within minutes: “Airlines’ Bookings Soar on Discounts, But Increases in Profits Aren’t Certain,” by Laurie P. Cohen, WSJ, Jan. 28, 1985.

  26. “the price card”: Remarks by T. G. Plaskett to Lenders’ Meeting, May 7, 1986.

  27. “across our bow”: Burr 9/17/93 interview. Some of Burr’s comments also appear in “A Conversation with Don Burr,” Scorecard: The Revenue Management Quarterly, Fourth Quarter 1992.

  28. posing as American customers: Burr 9/17/93 interview; Speech by Burr to the Wings Club, transcribed and printed in Airport Press, Feb. 1989.

  29. Burr was shocked: Burr 9/17/93 interview.

  30. dying at the thought: “Bitter Victories,” an interview with Burr by George Gendron, Inc., Aug. 1985.

  31. “had your Kool-Aid”: Burr interview, Inc., Aug. 1985.

  32. Burr’s mother called: Burr, Wings Club.

  33. tennis club: Burr 9/17/93 interview.

  34. “air bridge”: Quoted in “Will Frontier’s Fall Ground People Express, Too?” by Mark Ivey, James E. Ellis, and Chuck Hawkins, BW, Sept. 8, 1986.

  35. “Over time”: Quoted in Byrne, BW, Nov. 25, 1985.

  36. his horror: Burr, Wings Club.

  37. “remarkable offer”: “People Express Merger Might Cause Problems,” by William M. Carley and Teri Agins, WSJ, Oct. 14, 1985.

  38. standing ovation: Ibid.

  39. day’s notice: “People Express, Signaling New Strategy of Acquisitions, Will Purchase Britt Air,” by William M. Carley, WSJ, Dec. 30, 1985.

  40. buying time: Burr 9/17/93 interview.

  41. “raider-type stuff”: Ibid.; Byrne, BW, Nov. 25, 1985.

  42. “new wave capitalist”: Byrne, BW, Nov. 25, 1985.

  43. 10-foot screen: Ibid.

  44. “most comprehensive”: Quoted in ibid.

  45. Burr had vowed: Burr 9/17/93 interview.

  46. like Herb Kelleher: Ibid.

  47. Some pilots swore: Lavender 6/16/93 interview.

&
nbsp; 48. century-old home: Burr 9/16/93 interview.

  49. “my moat”: Burr 9/17/93 interview.

  50. “Kibbles’N Bits”: Dempsey, Airline Deregulation and Laissez-faire Mythology, page 97.

  51. boxed lunches: “Continental Air Will Offer Rivals’ Fliers Free Lunch,” WSJ, Mar. 14, 1986.

  52. “boom” the market: Burr 9/17/93 interview.

  53. anywhere from Denver: “Skirmishing That Only Looks Like a Fare War,” by Todd Mason, BW, Dec. 2, 1985.

  54. “beat the shit”: O’Donnell 6/9/94 interview.

  55. “change this board”: Ibid; “How I Spent My Spring Under a Billboard,” by Francis C. Brown III, WSJ, Apr. 8, 1986.

  56. stink lines: O’Donnell 6/9/94 interview.

  57. elderly woman had clunked: “Bumpy Flights: Many Travelers Gripe About People Express, Citing Overbooking,” by William M. Carley, WSJ, May 19, 1986.

  58. grew tardy: Dempsey, Airline Deregulation, page 83.

  59. Death Star: Burr 9/17/93 interview.

  60. “my children”: Ibid.

  61. “fucking minds”: Ibid.

  62. “I kept this”: Burr 9/16/93 interview.

  63. a go-between: “People Is Still Carrying Some Heavy Baggage,” by Chuck Hawkins, BW, July 28, 1986.

  64. titanic egos: ibid.

  65. “a final salute”: Reed 9/16/94 interview.

  66. “bittersweet moment”: “Texas Air Corp. Agrees to Buy People Express,” by William M. Carley, Teri Agins, and Daniel Hertzberg, WSJ, Sept. 16, 1986.

  67. flipped on: Burr 9/17/93 interview.

  68. they argued: Burr 9/16/93 and 9/17/93 interviews.

  Chapter 13: The Southwest Shuffle

  1. Consultants and academics: Barron 4/26/93 interview.

  2. “Kelleher’s bullshit”: Bakes 4/23/93 interview.

  3. resolved to strike west: Southwest’s strategy is detailed, among other places, in “Flying on the Cheap: Southwest Airlines Is a Rare Air Carrier—It Still Makes Money,” by Bridget O’Brian, WSJ, Oct. 26, 1992; “A Boy and His Airline,” by Jan Jarobe, Texas Monthly, Apr. 1989; and “Changing Fortunes of a Dallas Star,” by Harold Shenton, Avmark Aviation Economist, Aug. 1987.

  4. He boned up: Kelleher 10/14/93 interview.

  5. “Those were the rules”: Ibid.

  6. visiting his daughter: Ibid.

  7. austerity program: “Southwest Airlines to Drop Flights, Limit Hiring to Cut Costs,” WSJ, July 23, 1984.

  8. dilute the purity: Barrett 4/26/93 interview.

  9. “involved in a crusade”: Kelleher 10/14/93 interview.

  10. screening procedure: The description of Southwest’s hiring procedures is based in part on the Barrett and Barron 4/26/93 interviews as well as on information from lower-level Southwest employees.

  11. every employee’s paycheck: Kelleher, “Life as an Airline Commissioner,” Address to National Press Club, Washington, D.C., June 8, 1994.

  12. William Tell Overture: “Air Chortle Is Now Boarding,” by Adam Bryant, NYT, Oct. 2, 1994.

  13. leprechaun costumes: Jarobe, Texas Monthly, Apr. 1989.

  14. McGregor … encountered Kelleher: McGregor 6/10/94 interview.

  15. Kelleher’s own office: Kelleher 10/14/93 interview.

  16. different wall: Ed Stewart, Southwest public relations official.

  17. 48,860 pairs: Brenner, Analysis of Airline Concentration Issue, July 1990.

  18. “whale shit”: Barrett 4/26/93 interview; Jarobe, Texas Monthly, Apr. 1989.

  19. “growing disadvantage”: “Southwest Air Is Facing Challenge of Its Making,” by Ralph Blumenthal, NYT, Mar. 17, 1986.

  20. “American now has fares”: Kelleher interviews of 10/14/93 and 6/14/94.

  21. office on Fridays: “These Two Airlines Are Doing It Their Way,” by Joseph Weber, BW, Sept. 21, 1987.

  22. “I’m immortal”: Quoted in O’Brian, WSJ, Oct. 26, 1992.

  23. “lost my color”: Kelleher made the comment during a cocktail party in front of a 60 Minutes camera.

  24. “battle … is essentially over”: Airline Economics, Inc., “Airline. Consolidation: Where It Stands, What’s to Come,” 1987.

  25. “kill him”: Kelleher 10/14/93 interview.

  26. “You’re too young”: Ibid.

  27. say “up yours”: Kelleher 6/14/94 interview.

  28. “Dr. Ruth spoof”: Quoted in Jarobe, Texas Monthly, Apr. 1989.

  Chapter 14: Operation Stealthco

  1. day of fishing: Reed 9/16/94 interview.

  2. “Being second”: Ibid.

  3. some of Crandall’s people: Gunn 4/28/93 interview.

  4. “to my grave”: Ferris 5/27/93 interview.

  5. glass of gin: Reed 5/31/94 and 6/1/94 interviews.

  6. no reason to doubt: Ferris 5/27/93 interview.

  7. “pass the dividend”: Luce 8/26/93 interview.

  8. “when does management”: Ibid.

  9. withholding the name: Ibid.

  10. favorite color: Ferris 5/28/93 interview.

  11. Linked by satellite: “United Air’s Parent Flies off Handle at Its PR Concern,” by Michael J. McCarthy, WSJ, Feb. 19, 1987.

  12. “It’s a name”: Quoted in Ibid.

  13. Egregious Corporation: “How Dick Ferris Blew It,” by Kenneth Labich, Fortune, July 7, 1987.

  14. glasses of wine: ALPA’s takeover effort is intricately detailed in “Revolt at Allegis: How Labor and Wall Street Stopped Ferris,” by Mark Hornung, Crain’s Chicago Business, Nov. 30, 1987.

  15. “new toy”: Roger Hall, “History of the ESOP,” in May 1994 newsletter of ALPA’s United affiliate.

  16. hired help: Rick Dubinsky, speech before the Harvard Trade Union Program, Feb. 28, 1991.

  17. an also-ran: Interview with Rick Dubinsky by Richard Rolfe, Airline Business, Dec. 1989.

  18. Eastern unions … provided: Hall, May 1994 newsletter.

  19. “buy our jobs”: Rolfe, Airline Business, Dec. 1989.

  20. Operation Stealthco: “United Airlines Pilot F. C. Dubinsky Flies Unfriendly Skies in Buyout Effort,” by Judith Valente, WSJ, Apr. 8, 1987; “How Labor, Wall Street, Changed Allegis’s Course,” by Robert Kearns, Chicago Tribune, Sept. 21, 1987.

  21. flying to Des Moines: Ferris 5/27/93 interview.

  22. three-page letter: Kearns, Chicago Tribune, Sept. 21, 1987.

  23. “chain reaction”: “Cloudy Skies: Rising UAL Turmoil Threatens Ferris’s Job as the Chief Executive,” by Judith Valente, John Koten, and Scott Kilman, WSJ, Apr. 17, 1987.

  24. “in jeopardy”: Ibid.

  25. Luce was horrified: Luce 8/26/93 interview.

  26. community of interests: “Coniston to Seek Control of Allegis Board, Says It Would Sell All or Part of Concern,” by Laurie P. Cohen and Judith Valente, WSJ, May 27, 1987.

  27. must not divide: Luce 8/26/93 interview.

  28. drafted a response: Ibid.

  29. “anti-management bias”: Charles F. Luce, “UAL Board Backs Chairman,” letter to the editor, WSJ, Apr. 20, 1987.

  30. Boeing now had two thirds: “Boeing’s Roll to Continue, Analysts Agree,” by Mark Lyon, Airline Executive, Dec. 1986.

  31. clinch its standing: “Boeing’s Accord with Allegis Reflects Stiff Competition Among Aircraft Firms,” by Eileen White, WSJ, May 14, 1987.

  32. “Coniston Schmoniston”: Ferris 5/27/93 interview.

  33. Allegis Visa card: Kearns, Chicago Tribune, Sept. 21, 1987.

  34. under advisement: “Canceled Flight: Allegis Shakeup Came as Shareholder Ire Put Board Tenure in Doubt,” by Judith Valente, Laurie P. Cohen, and Scott Kilman, WSJ, June 11, 1987.

  35. win a proxy fight: Ibid.

  36. “sell something”: Olson 6/28/94 interview.

  37. “own the company”: Hornung, Crain’s Chicago Business, Nov. 30, 1987.

  38. “Don’t worry”: Luce 8/26/93 interview.

  39. “lost our confidence”: Quoted in “Allegis Considers Raising Payout Offer in Wake of Pilots
’ Proposal,” by Judith Valente and Laurie P. Cohen, WSJ, June 8, 1987.

  40. Cooley … agreed: Luce 8/26/93 interview.

  41. “alternative to Dick”: Olson 6/28/94 interview; Luce 8/26/93 interview.

  42. “If you don’t”: Olson 6/28/94 interview.

  43. “principal motivation”: Luce 8/26/93 interview.

  44. “getting weird”: Ibid.

  45. “my friend”: Olson 6/28/94 interview.

  46. “best interests”: Luce 8/26/93 interview.

  47. McGillicuddy … suggested: Ibid.

  48. “there’s no point”: Ibid.

  49. “You got it”: Ferris 5/27/93 interview.

  50. “big bad wolf”: Lum 6/7/94 interview.

  51. fabulously lucrative: Olson 6/28/94 interview.

  52. Teton Valley: Reed 6/1/94 interview.

  53. “human being”: Ibid.

  54. more than $4 million: The company paid Ferris a settlement equal to his salary of $650,000 over five years, plus $792,640 in stock-option profits. Allegis Corp. proxy statement, Apr. 27, 1988.

  Chapter 15: Fly Now, Pay Later

  1. feeder airlines: “The New 20,000-Pound Gorilla,” by Alison Chambers, Commuter World, Dec. 1987.

  2. 17,000 … terminals: Lee Howard, “The Changing U.S. Airline Picture,” presentation to The Future of Aviation, Fifth International Workshop, National Academy of Sciences, Oct. 6-8, 1987.

  3. assembled with debt: Statistics on the magnitude of Texas Air’s debt are taken from “House of Mirrors: Lorenzo’s Texas Air Keeps Collecting Fees from Its Ailing Units,” by Thomas Petzinger, Jr., and Paulette Thomas, WSJ, Apr. 7, 1988.

  4. “merger escapades”: Robert Crandall, American Airlines, address to Fall Planning Conference, 1986.

  5. “legalized warfare”: Plaskett, American Airlines, address to Fall Planning Conference, 1986.

  6. into a mausoleum: Bakes 6/16/94 interview.

  7. revitalization plan: Bakes 9/7/93 interview.

  8. “one-trick pony”: Ibid.

  9. “a cancer”: “Texas Air Demands Deep Cost Cuts at Eastern,” by Paulette Thomas, WSJ, Jan. 22, 1989.

  10. “a nonissue”: Ibid.

  11. “Weapons formed”: A transcript of Bryan’s comments at the rally was published in the IAM District 100 newsletter of Jan. 12, 1987. The exact King James scripture is, “No weapon that is formed against thee shall prosper.” Isaiah 54:17.

 

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