page_title: Frank Lorenzo
section_title: Purchase
hierarchical_section_title: Frank Lorenzo / Continental Airlines / Purchase
caption_attribution_description: CO 747-200 @ LAX
context_page_description: Francisco Anthony "Frank" Lorenzo is an American businessman. He is well known for his leadership of Continental Airlines and Texas International Airlines, between 1972 and 1990, through airline deregulation. Lorenzo also led the creation and management of the holding company for the group, Texas Air Corporation, through which New York Air was formed in 1980 and Eastern Air Lines was acquired in 1986, as well as Frontier Airlines and People Express Airlines.
  As an airline manager, he gained a reputation of union busting, stemming from his leadership during the 1983 bankruptcy of Continental that enabled the company to void its union contracts, and become a low-cost, successful airline, and during the strike and bankruptcy of Eastern that eventually led to its permanent shutdown in 1991. Lorenzo's airline history is contentious, as he is both "despised by unions and admired by airline strategists." In 1990, after Lorenzo liquidated his holdings after 18 years in the airline industry, Alfred E.
context_section_description: In January 1981, Texas International Airlines announced an offer to buy Continental Airlines. It had already purchased almost 10% of Continental's shares, and offered to buy enough to bring its stake to 35% to 48%. Continental already had an agreement to merge with Western Airlines, and Texas Air announced that it would seek to vote its shares against the merger. As with previous attempts, TIA's takeover target was a much larger company than itself.
  There was opposition to TIA's planned takeover. In particular, employees feared that Lorenzo would lay off workers and that he was anti-union, demonstrated by formation of New York Air as a non-unionized company, charges which Lorenzo denied by making clear the employees had the right to select union representation should they have so desired. While TIA acquired 49% of Continental's shares, an employee group attempted to stop the plan through legal maneuvers designed to give them control of the company rather than sell to TIA. Continental's chairman, Alvin Feldman, objected to the purchase, telling Lorenzo that he thought the combined company would be "very weak"; as the takeover battle continued, Feldman was described as being "bitterly opposed" to the plan.
  The financing for the employee group's planned purchase fell through, and as Continental was preparing a public announcement, Feldman committed suicide in his Los Angeles office. TIA received approval for its purchase from the CAB, and President Ronald Reagan did not block the deal. The legal battles between the two companies ended in November, with Lorenzo and two associates elected to the board of directors of Continental.
  1981 was a financially difficult year for Texas International, New York Air, and Continental. Lorenzo claimed, and some analysts agreed, that Continental's problems were worse than they had appeared before his purchase of the airline. Continental's losses for 1981 were over $100 million, and an economic recession further hurt Continental's finances. It attempted to renegotiate contracts with several unions.
  A series of steps to combine TIA and Continental followed. Lorenzo consolidated the historic TIA Dallas hub to Houston as part of a plan to combine the routes of TIA and Continental in a hub and spoke system. Continental moved its annual meeting from May to March 1982; at that meeting, Lorenzo was named chairman of Continental. In July, Continental and Texas Air approved a "financial merger" of the companies, although operations were still to remain separate. In September, the employees of both Texas International and Continental were informed that there would be "operational and management integration of the two companies effective Oct. 31 [1982]". Although Texas Air remained the parent company, the combined companies operated under the Continental name, brand, and aircraft livery.
caption: Continental Boeing 747 at Los Angeles in 1987.
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