Behind the Bastards - Part Two: Frank Lorenzo: The Man Who Ruined Air Travel

Episode Date: August 3, 2023

Robert is joined again by Miles Gray to continue to discuss Frank Lorenzo.See omnystudio.com/listener for privacy information.

911 what's your emergency? It's a nightmare we could never have imagined. In a killer, we were still on the loose. In the 1980s, we were in high school losing friends, teachers, and community members. We weren't safe anywhere. Would we be next? It was getting harder and harder to live in Mompine.

Listen to the Murder Years on the iHeart Radio app Apple Podcasts or wherever you get your podcasts. The True Crime Podcast Sacred Scandal returns for a second season to investigate a led sexual abuse at Mexico's La Luz del Mundo Mega Church. Journalist Robert Garza explores survivor stories of pure evil experiences at the hands of a self-proclaimed apostle who is now behind bars. I remember as a little girl being groomed to be his concubine,

that's how I was raised. It is not wrong if you take your clothes off for the apostle. Listen to Sacred Scandal on the IHR radio app Apple Podcasts or wherever you get your podcasts. What's up? This iced tea was something I know you're gonna wanna hear. In my new podcast, iced tea's daily game. your podcasts. I'll be coming to you every single weekday with a fresh new quote that speaks directly to me and I hope to you as well. In five minutes or less, I'll break down why these words matter and reveal personal stories and experiences that show them in action in my life. My goal is to inspire all of you out there to achieve success and happiness. Whatever that means to you. So start every weekday morning with me and get inspired. Listen to I.C's Daily Game every week day

on the iHeartRadio app on Apple Podcasts or wherever you get your podcasts and start your with me. Ah! What's miles? My... Miles. How are you doing miles? What's miles? My miles? Miles.

Oh, I'm getting it. What's miles my gray, maybe? I just had a bunch of ice cream. Yeah, yeah, you're eating blue ice cream, which is going to make it look like you were, I don't know, I wanna say like something grossly sexual about like the Braveheart guy, cause all the blue stuff.

Oh yeah, yeah, yeah, yeah, yeah. Figurales. Yeah, yeah, yeah, yeah. Figure out a good joke ahead of time, so. Yeah, I don't know what you'd say, but I get it, I get what you're going with it. You understand what the potential was. Oh yeah, totally.

I see the elements on the table for something great. I didn't know how to put it together either. Yeah, but yeah, this ice cream is so blue that it's, I'm a little alarmed how much I like it, and I feel like a fucking child when I order it at this place, but you know what? Who gives a fuck? Maybe I'm a child.

What was your first thing that you ate as a kid and then you ate it again as an adult? And you're like, this isn't food. What the fuck? What people shouldn't have access to this? Oh my God, there's a few things. But I feel like maybe like shark bites or like gushers. Oh no.

No, gushers are wholesome. I love gushers. I love them too. I mean, I remember back at the old studio, we had them there, remember? Yeah, I ordered a high-fucking order. Yeah, yeah, I remember. But here's the thing, not that I'm saying I disrespect them, but I remember, you know, like, yo, this is fucking, this is just sugar.

What the fuck am I doing? But I do. You're sugar. Mine was always, and I still kind of love them, is those like, what do you call it? It's like the stick and then like the pouches of colored sugar. Oh, fun dip. Yeah, fun dip. You're just like shoveling sugar in your mouth.

Dude, those are, it's so funny. Like, it was an awesome thing. Yeah, just chemicals on a dip stick, then just licked over and, like, what was that stick even made of? It's pure sugar, Miles. The only thing a fun dip is, it you just licked over and like, what was that stick even made of? It's pure sugar, Miles. All the only thing a fun dip is, it's just raw sugar. It's just pure sugar. I guess the only thing is, yeah, just like the pouch that it was in was just the only thing

that was not sugar. No, and it's like, you know, we're recording this the week that, I don't know where this will air, but as we're recording this, everyone, like there's just a big story where they're like, oh, aspartame causes, you can cause cancer. And like you look into it and it's like, well, if you have like between a dozen and three dozen cans a day, you might get cancer. As opposed like, I don't know, man, everything, like we're all shuffling so much crap and poison into ourselves at all times. I don't know. I feel like Diet Coke's not going to be many people's primary risk factor, but whatever.

It's also it's pronounced as part of me. Okay. We all know that. That's how we have to say, I spot that. But yeah, I think that also feels like the kind of thing that like the sugar lobby would come out with too. Oh, yeah, it's costly. Unlike sugar, which isn't associated with any health problems. You're about fucking sugar. Yeah. Fucking just do whatever got like, listen, hat like statistically like a third of the people listening to this are doing so while blanket it in wildfire smoke and like burning the burning remnants of asbestos and insulation.

It's not going to be the aspartane that kills you guys. Take your aspartane, eat your blue ice cream, do a photo sword. Yeah, whatever, it doesn't matter. You're fine, and by fine, I mean doomed, but everything is, so it's okay, whatever. Anyway, you want to talk some more about Frank Lorenzo? No, fuck yeah, I do. So today, United Airlines is kind of the descendant of Continental. And United Airlines is like an airline, right?

I don't think anybody's like, ah, United. I have so many great United experiences. It's also not like the worst of the airlines. They're just kind of like... Right in the middle. Yeah, right in the middle, you know, they're not as nice as like a smaller airline, like Alaska, but I will take them over,

I don't know, fucking American airlines or whatever, certainly over like spirit. But I'm never like psyched to get on a fucking United Flight, either, but people were psyched to fly continental back in the day Continental was like one of the airlines as shit, you know, the Reagan era is kicking off, you know You've kind of got like the it's like the end of the late Carter era early Reagan era is when sort of continental is kind of starting to Starting to look its age, you know, even after deregulation

They've kept their high fees and they've kept their passenger perks. So like, passengers consistently rated as like one of the best airlines in the world, but it's not making a lot of money. Whereas TI, the airline Lorenzo runs, is basically the opposite. It's a shitty budget airline that cannot make, or that like makes a profit,

but does it because it's shitty enough for people to afford. In 1979, Continental lost more than $13 million, and the bleeding accelerated in 1980. The company gets a new CEO at this time, a guy named Alvin Feldman, and Alvin is generally remembered. That should be a spoiler. As a nice guy and a diligent businessman of the old style, and he's trying to stop the bleeding,

but he doesn't want it to like change his character. He tries to like, he merges it with this other company. He's hoping that like he can keep it, you know, special and somehow make it profitable. But Continental in addition to like dealing with changes in the market is also feuding with their workers over new contracts. And because they're not as big as like American or TWA,

they've got a pretty small market cap, which means that you can actually purchase a controlling interest in their stock for surprisingly little money. And Lorenzo to Lorenzo, this is like a shark smelling blood in the water, right? So it's total market value is like 150 million. And because again, the stock market's nonsense, the company is worth way more than 150 million. If you just like add up all of their planes,

there worth a lot more than that. But because the business isn't doing as well as it used to be like their market cap is shit. And so he's able to Lorenzo's able to basically like buy up a bunch of big investors who have like interests in it and like work out a buy. Like he's, he just basically starts eating up more and more and more of like getting close through a controlling interest in continental. Because if he's able to get it, he'll wind up with way more value in like assets. He can strip that he's actually spending on this thing. So this process starts for him in February of 1981. And Feldman, when he realizes, oh my God, this guy who is like

the corporate raider of the airline industry is buying up my beloved airline. He tries to go to war with him, right? But Lorenzo is a lot faster. He's a lot smarter. I'm like, dirty, I bet. Huh? And fights dirty or I bet. He fights dirty. Feldman's like a nice guy. He's not, he's going to try the high-minded way of fighting back and it's not going to work for him.

But like, so he, as continental, he goes to court to try to get the CAB to rule in favor of like, you know, basically saying that like, hey, for Lorenzo to buy up Continental because he already owns this other airlines is anti-competitive, but the CAB rules in Lorenzo's favor because it's the Reagan era. Texas monthly rights quote, while the 53 year old Feldman remained at Continental's Los Angeles headquarters, Lorenzo was everywhere,

flying around the country, lobbying legislatures, institutional investors, and even the media. Lorenzo made many promises. He wrote California officials that he had no plans to move continental headquarters, or any of its operations out of Los Angeles. He said he had no intention of firing employees. He said he wouldn't sell planes to raise money. Within two years, he had done the ball.

Yeah. That's gotta worry you. I'm not gonna do that. I'm not gonna like sell the planes. I see here for money No, why would I do that if I come on guys? Come on as a rule if you're like a regulator and like somebody starts making specific promises about what they won't do if you let them do something they want to do They're those are the things they plan on doing right like like telling themselves. Yeah, yeah So Continental's unions are kind of the most effective defense that Continental has against

Lorenzo. And kind of working with Feldman, they come up with what seems like a pretty good idea on paper. It's what's called an employee stock ownership plan or ESOP. And basically the idea that these unions work out with Feldman is that workers are going to buy control of the company. This could work out for them because federal law gave ESOPs really nice tax breaks, and they're able to work with some banks to get like, there's like 185 million they need

to get financing for this. So Feldman's on board, the unions start like making a national campaign, basically telling people, hey, you have all these nice fond memories of continental, where this prestigious airline, and we wanna stop these ghoulish, soulless Reaganites from taking over our beautiful airline, and it'll be worker owned. And it shows you how different the world is

that the Texas legislature passes a resolution like cheering on the effort, right? Actually opposing a Texas-based company trying to take over the airline. Yeah. Well, because like, if you think about it, like, I'm not going to say necessarily that there's less culture war brain poisoning, but it's different. And conservative in this era, you know, they voted for Reagan, obviously, but there's still this attitude of like, well, these are working, the idea of like working class people taking over their own airline is going to be more attractive

to a lot of conservatives than like letting this ghoulish bloodless Harvard grad take it, you know? Right. Whereas now it's completely inverted. Yeah. And it's like the thought of like any worker powers, it's like, no, no, no, no, like then fire bomb them. Yeah, he would post, Lorenzo would post a picture of himself in jeans and a shotgun and people would be like assassinating pilots on the highway, you know? So there was a, this is like a potentially, you know, cool idea, but there's a problem. The plan needs majority approval at a shareholders meeting for like the employees to be able to

do this thing. And Lorenzo had 48.5% of the stock at this point, which is enough to block like anything from happening. Continental goes to the New York Stock Exchange and the California Corporation Commissioner's Office to try and like force through the ESOP plan without a vote, but they get denied. And on August 7th, because it's not working out, the banks who'd offered to help finance it withdraw their financial commitments. And like, you know, it falls apart. So this doesn't work tragically like the employees are not going to be able to buy their own airlines.

And so two days after the banks pull their financing, while the RINZO continues his full court press to take over continental, the CEO Feldman issues a press release, telling all of his workers that the ESOP plan is no longer possible. He tells them, sadly, he's like, and this is like a pretty emotional letter for him. He's like, you know, we can't get financing, you know, this is kind of sunk our chances. I'm so sorry that this failed. And then after sending this out, he leaves his office at LAX in the middle of the day, uh, goes on a little shopping trip and he returns soon after with a package. Uh, Frank works the rest of the day, winding down his control of continental, preparing to

hand it off to Lorenzo. And then at a little after seven PM, Pacific standard time, he calls the security desk and he asks them to turn off the lights in his office. Then he gets on the couch and he shoots himself through the head. Oh my God. No. It's like it's pretty bleak. The fuck, this is some Paul Thomas Anderson. Yeah, it kind of is. Like, it's this really like intense story.

There's a lot about sign of the changing of the guard just sort of within the capitalist system from like, you know, Feldman, I'm not going to pretend to outfell. I'm sure he wasn't like, you know, a fucking flawless hero. But he comes from this era where like, yeah, like we're capitalist, but there's this understanding of like the prestige of the business, some things are, it's not purely about maximizing profit as opposed to Frank Lawrence was like, no, nothing matters, but short term stockholder value. Yeah, because it's like, no, nothing matters, but short-term stockholder value. Yeah, because it's like, yeah, Feldman's like from there of like you provide people a service

and they give you money and you want it to be fair and you give them some kind of value back. And this guy's like, I have fuck all that shit. And it's like, you're fucking planes, dude. Get the fuck out of my face, loser. Like Feldman just can't exist in the era of Frank Lorenzo. So, no, very like no country for old men. It really is, yeah.

It's one of the more, like, yeah, Cohen Brothers-y fucking stories in the history of like modern capitalism. And that's like this. That's the day that the shit fell through basically that happened. Yeah, yeah, kind of, well, like a couple of days after. Right, but that was like, but that was sort of like

the last day of that rule. Yeah, and it's one of those things, it's interesting. I haven't seen a lot of like, you know, we do get to bring up the Coen Brothers. We've gotten a lot of like movies about like, you know, the corporate goal or the capitalist goals of like the train industry, right? Like stuff like that.

Right, right, right. And a lot of more modern stuff. I've never actually seen this period depicted, but it's pretty, like, we're gonna go over some of this, like, what's happening? This like battle between like the unions and the airlines and like, this old attitude that's less competitive of like how airlines should be in the new one.

Obviously, like, none of these people are, you know, we talk about the old way of things, it is worth noting part of why it falls apart is that it can't make money, because it was never the primary purpose. So it is complicated. It's certainly more complicated than a lot of the stuff we talk about.

But yeah, Frank Lorenzo is reached out to by the New York Times and he issues a statement being like, oh, you know, Mr. Feldman was a great guy, you know, I'm so sorry, he was family. Like, oh my God. Yeah, like, you don't need to say anything, man, we know you don't care. Like, of course, nobody expects that from you. Your job is to not have a soul, Frank Lorenzo, it's fine. He's like, yeah, but I gotta say this stuff, you know, so I don't think human. You gotta say the thing, union resistance died with Feldman.

Texas air takes over Continental the next month and in short order, the two airlines are combined, which means Franklin, Lorenzo now controls effectively the seventh largest airline in the company or in the country. Now, there's a downside to acquiring a big bleeding giant like Continental. It is a money sink, right? There's a reason why it was on the table to buy. The airline industry is in a very new place and it's kind of reeling from all from deregulation, from all these sudden changes at the end of the

Carter era. And then at the start of the Reagan era, in August of 1981, you have the air traffic controllers strike, right? And this is basically air traffic controllers. It's like a hard gig. The hours are shit. They're not making enough money so they decide to go on strike. And if you fuck up, it's disaster. If you fuck up so many people die. But when they decide, like, most people, again, like if you've got, I don't know, like people who work at Albertson's grocery stores go on strike. You know, that can matter, that matters in a community. It certainly matters to Albertsons, but like, there's other grocery stores, you know, like the, the overall impact to the country isn't massive. Whereas if all the air traffic controllers go on strike,

like, you can shut, like, yeah, and, you know, obviously, that's not something a guy like Ronald Reagan is going to think should be acceptable. He is fundamentally against the idea that any union should have as much power as the air traffic controllers do. So he calls their strike apparel to national security and he orders them back to work at the risk of losing their jobs. And there's still elements of this in like air unions. I think we all remember when like the stewardess is union put an end to that like the fucking

budget, like the government shut down basically by being like, well, what if planes can't go in the air? How would you fuckers feel that, you know? Right, right, right. And this is, yeah, so there's a, yeah, basically, Reagan's like, yeah, if you guys don't go to work, I'm going to fire everybody. And the union calls Reagan's bluff. And Reagan does, in fact, fire everyone. And he bans all of these air traffic controllers who had struck from federal service for life. This is very celebrated by conservatives, but it is a fucking disaster for a while, because like suddenly all the guys who make air traffic possible are gone.

Right. So they have to fill vacancies, they bring in the military, flight controllers and ship from the military. There's controllers who like, for whatever reason, had worked outside the union and like different, you know, flight controllers and shit from the military. There's controllers who like for whatever reason had worked outside the union And like different like weird little kind of niche parts of the industry. They bring in like like retirees and stuff

They bring in like people who had refused to go with the union on the strike But it takes ten years before FAA controller staffing returns to normal The benefit of this for Republicans is that as much of a fuck up as it is for the industry and for flyers and for obviously these controllers, it's almost like a death blow to organize labor. On a lot of ways you could argue that you kind of have the labor movement starting up late 1800s, early 1900s, fighting for that eight hour work day, all these other things that we get from organized labor. And labor has a significant degree of power kind of up until Reagan crushes this strike.

And it's, it's like, it's an epochal change in the way that we conceive of labor in this country. Yeah, I mean, it's, I feel like the last time we were talking about this was just with the rail workers at the end of the year. And like, oh, what's the government going to do? Because the last time it was the air traffic controllers and look where that got us. But yeah, it is true. There's so many huge fundamental shifts happening, whether it's just like the perspective of what even a business is and what it's meant to do. And like who it's supposed to provide value for to who the fuck even deserves to like, you know, demonstrate that they need better wages

or working conditions. Yeah. And such a like cynical way. Yeah. Now, you know, we can talk more, there's a lot more to say about, you know, Reagan and the breaking of that strike, but that is not the story of today. While you might expect Frank Lorenzo to be in favor of Reagan breaking the strike, and

obviously he's a fuck the unions guy. This also has a negative impact on his business, because when he buys continental, his plan is to basically cut a bunch of the routes that aren't efficient and launch a bunch of new routes and kind of like uses existing business to make it more effective, but like he can't actually expand or really wildly change the way his airline works and the way that he needs to. If there's this like cap on how much air travel can exist because we're out of fucking controllers, right?

People do. Like this is a problem for him. And he's just burnt a shitload of capital to buy Continental. So he needs to be able to expand and show that he can make a profit. In 1981, then Continental reports losses of, again, when he had bought Continental, they were losing like 13 millionaire and 81, they lose $100 million. So it's a little bit of like an Elon Musk type thing where it's like, I don't know, man, maybe this wasn't the best plan's like, I don't know, man, maybe this wasn't the best plan.

I think I can do something. Oh, fuck my life. Yeah. Oh, shit. You know, some of this is not directly his fault, but it's certainly the fault of like kind of the ideologies he's championed this like war on, you know, the rights of labor. And did he do like a boxing match against another airline? Yeah, he does.

He actually beats the shit out of Mark Zuckerberg. But at this point, Mark Zuckerberg is just like, you've seen some of those old Catholic propaganda cartoons with like the babies that are in heaven before they're born. Yeah, exactly. That's who he's fighting. Yeah, like the Catholic anti-abortion propaganda angel, Mark Zuckerberg. Uh a sure fight of Catholic propaganda. This podcast is sponsored by Catholicism. Catholicism. It's fine now.

Yeah. What? What mood are you in today? It's. I don't know. I don't know. Sophie. I don't know where I'm coming or going here.

Sacred Skando, one of the best new podcasts of 2022, is back with a closer look at the darkness surrounding mega-church La Luz del Mundo and its leader, Nasson Joaquin Garcia. They believe that he was Jesus Christ on Earth. It wasn't even so much that he liked sex. He wanted something to pray. It's the largest cult in the world that no one has ever heard of. For three generations, the Luz del Mundo had an incredible control on his community that began in Mexico and then grew across the United States, until one day.

A day of reckoning for the man whose millions of followers call him the Apostle. Their leader was arrested, and survivors began to speak out about the sexual abuse, the murder, and corruption. This is just a business, and their product are people. They want to know that they will kill you. Listen to all episodes now on the I Heart Radio app, Apple Podcasts, or whatever you get your podcasts. 911, what's your emergency? You shot her! Oh my God!

It's a nightmare we could never have imagined. And a killer who is still on the loose. My small town rocked by murder. There are certain murders I'm scared to discuss. In the 1980s, we're in high school losing friends, teachers, and community members. One after another, after another for a decade. We weren't safe anywhere. We're teenagers terrified to leave our own homes.

Would we be next? Who is killing all the kids? And why? In that moment, I saw rage. And why do some want the town secrets to stay dead and buried forever? I'm not sure why you're digging up all this old stuff again, but I'd be careful. Don't say I didn't warn you, Nancy.

Listen to The Murder Years on the iHeart Radio app Apple Podcasts or wherever you get your podcasts. Hey, what's up y'all, this is Eric Andreik, but I made a podcast called Bomming about absolutely tanking on stage. I'm talking about your mother and her role experience as a performer. I tell gnarly stories and I talk to friends about their worst moments of bombing in all sorts of ways. Bomming on stage, bombing in public, bombing in life. Marley stories and I talked to friends about their worst moments of bombing and all sorts of ways. Bombing on stage, bombing in public, bombing in life. Like the time I stole a girl's phone during a set and she dumped on stage and threw a big

A-maker punch to my nose. I wanted to know what's the worst way they ever bombed or performed way too drunk or high. There was a ever time where they thought they were going to crush and they stunk it up. Subscribe to my podcast bombing with Eric Andre to hear more crazy stories from me and my friends. going to crush and they stunk it up. big money players network on the IAR radio app Apple podcast or wherever you get your podcasts. We are back and miles. This is exciting. I just found out from you once I started talking about Catholicism that you are actually engaged in recruiting for a new crusade to retake the Holy Land. Yeah. But because we're 90s kids, the Holy Land is kind of the ephemeral concept of playing

the N64 with your friends at a birthday party. Exactly. But there's still a high death toll expected, is that correct? Yeah, yeah, because as much as we love Golden Eye, we are going to be using actual landmines and proximity mine. Excellent. Yeah. Yeah. Yeah. Well, uh, find, find miles on a Gibson go and Hattori on. He's taking donations on both of those to absolutely reclaim our 90s video game past. And by that, I think you guys know what I really mean. But I'm, but you know, we get the money. It's about N64. Okay. Yeah. Oh, so 1981, Continental loses $100 million. And Texas, Texas air is plummeting too, right? He's brought, he had like, it was looking like, wow, this guy's, he saved this company. He made it profitable. what a genius. He loses $50 million at 1981.

So this is a disaster. Barren's calls it a stockholder's nightmare. And what's actually happening here is that a lot of Frank's success, the perception that he was this like master of rescuing damaged airlines, was not real success, but the result of a rational exuberance.

Investors liked how he talked about unions, and the market was good for the kind of airline he ran, but he was making a ton of bad calls too. After the Continental acquisition, he launched a new major marketing rollout that had flopped disastrously, making Continental in this period the only airline that sees both revenue and passenger load dropped for the quarter. So this is kind of revealed that he's not a great airline manager. He was just good at convincing stockholders that like that's were on the up end.

But that's how like all these private equity things end up is guys who only know how to make line go up end up taking over like healthcare companies and they're like, I don't know. I just know how to make fucking numbers look different. Yeah, I can make the line go up. Now I will say in a little bit of defensive Lorenzo, this is like a real bad time to be running most airlines.

If you're not one of the top two or three big ones, you're having a lot of trouble. Braniff collapses at this time, so do a lot of the other old giants. And most of them are getting bought up by the controllers at the very top. And Frank has the seventh biggest airline, but there's a pretty big drop off between like the top three or four and number seven.

And what we're seeing in this period is kind of the backswing of deregulation, right? Initially, there's this huge drop in ticket prices way more people take to the sky, but the end of the CAB's anti-competitive regime also leads to an inevitable tightening of the industry. And kind of where that's ended up today, we talked about it's not entirely negative. There's a lot of things that are positive about deregulation. But the other thing that it's like the way it all winds up is that today four carriers control 80% of the domestic airline market. As former American Airlines chairman Robert Crandell told ABC, the consequences of deregulation

have been very inverse. Our airlines, once world leaders, are now laggards in every category, including fleet age, service quality, and international reputation. Fewer and fewer flights are on time. Airport congestion has become a staple of late-night comedy shows, and even higher percentage of bags are lost during this place. Last minute seats are harder and harder to find. Passenger complaints of skyrocketed. Airlines service by any standard had become unacceptable. Now Crandall is a business school too, right?

And he's like, he's kind of moaning the deregulation in part because like he's a guy who had succeeded in an earlier age of the like pride and exactly. Yeah, but it's one of those things. So like, I don't know, there's a lot of downsides to deregulation. And at first, it doesn't matter to Lorenzo, but like by the time kind of we're in the early 80s, the industry is starting to contract. And he's just kind of, it looks initially he's not big enough to like make shit work. He's going to eat and alive by all sides. So the walls are kind of closing in on the guy at this point and he defaults to what was basically his only real strategy, cutting perks for passengers and squeezing his employees as hard as possible.

Frank didn't just see this as good business. There was a degree to which this is like a thing he enjoys. It's like a pleasure to him fucking with his workforce. I found a book series called Flying the Line by George Hopkins. George is a former Navy pilot and an air travel industry historian. And he's got like this series of books called Flying the Line. And if you like, if you want a frustrating amount of detail about how air travel used to work, George is your boy, right? He will tell you way more than you ever wanted to know about how fucking airlines worked in the 70s and 80s.

He portrays Lorenzo, and again, he's got an axe to grind against this guy. He portrays Lorenzo as almost ghoulishly excited to fuck over stewardesses in particular. Quote Phil Nash, who went to work for Continental in 1966 after serving in the US Air Force, and later became Alpe EVP in 1980 to 1982, will never forget his first encounter with Frank Lorenzo.

Above all others, Lorenzo typified this new managerial breed, at a special meeting in Denver Nash asked Lorenzo, who was in the process of taking over Continental at the time, while he was so intent on reducing the pay of flight attendance. Didn't he know, Phil Nash asked, that many of them were single parents who couldn't afford to own homes that the pay rate he was proposing? Lorenzo looked at Nash as if he were crazy. Quite frankly, I don't believe flight attendance ought to make enough money so they can own houses.

Lorenzo told a flabbergasted Nash, maybe they should find another job that pays better. Oh fuck. Wow, he's always wearing his like sociopath badge on his sleeve at every opportunity. He can't even, he's like, yeah, yeah, they don't, I mean, they don't deserve air. Yeah, I don't think they're really people. Yeah, fuck them.

Why don't we just shoot them? Yeah. We should, I mean, up to me, we throw them out the fucking plane before he land and get a new crop before the next flight takes off. And like, yeah, it's, it's wild because like Nash is obviously Nash is a, is a capitalist Nash is a guy who believes in free enterprise. But also he, he does, he comes from this old era where he's like, well, but they wouldn't be able to buy houses and that's like the whole point, right? Like everyone's supposed to be able to buy a house. That's why you toil no

Some people are talking idiots. Take these jobs and fuck them if they take them Yeah, like they work and then ideally they drop dead at age 49 when they stop being as profitable So Frank's prime target next is going to be pilots now Now, for very obvious reasons, pilots tend to make pretty good money, right? And their costs are one of the more significant baked-in costs for airline management. And this is normally when we talk about the struggle of unions against management, we're talking about like, you got a bunch of coal miners, right? And maybe the industry changes around them or like the executives make a bad decision. But the coal miners are like doing their job.

They're getting the coal out of the world and they're just getting like fucked over by the people who run the company. It's a bit different with pilots unions because for one thing up until recently, pilots had kind of run a lot of the airlines, right? So even if you're just a flyer, you're not in management technically, the guy who runs your company is probably a pilot. And so we're a lot of executives and maybe you worked with some of these guys. So like when other airline unions get fucked over, the pilots are usually safe.

You know, because they're close with management, right? Right, right, right. And it's like, you know, today we're dealing with this thing where like there's a shortage of pilots in part because there's this very unreasonably long period of time in the US where you have to be trained and have experience to be able to be a commercial pilot. That's much longer than what the requirements are in Europe. It's a thing that the pilots unions have fought for because they make more money that way. Not blaming everything on the pilots, but it's not exactly the same as the Stewardess'

union, because they are closer the pilots, but it's not exactly the same as like the stewardess's union, right? Sure, sure. Because they are closer to running closer to power, right? So pilots have more baked-in benefits, and they also like, a lot of them are like friends with the guys who are running their company. So one consequence of this is that when management and other airlines had made cuts, the pilots had generally been spared. Dennis Higgins, who worked for Texas International, explained, quote,

some people in senior management were extremely close to the pilots and smoothed that mess over. They spent time in pilots homes, went to kids graduations. It was very much a family atmosphere. So Lorenzo obviously does not care about the pilots. He wants to fuck them over, but he understands there's an opportunity here, right? Because the pilots unions are already kind of acclimated to the idea that like, well, maybe we can fuck over some of like our co-workers and other unions and will still be okay. And the Rhinzo, he's kind of like the British Empire, right? He's like, I feel like this is an

opportunity I can play these unions off against each other in order to benefit myself." Hopkins writes, quote, Lorenzo for all his faults made no secret of his plans, but he deviously led various employee groups to believe that he was after concessions only from other unions. At the time of his takeover, Lorenzo hosted a cocktail reception for TXI's pilots at the Houston Intercontinental Hotel. Lorenzo flatly declared that except for pilots, he intended to take the airline back to the employment levels of 1967. There are profits to be made here. Dennis Higgins recalls the Renzo saying,

we're going to continue operating the same number of trips, but we're going to get rid of some ground for folks. So because TXI's ground folks are unionized, this strategy means that the airline is going to like, there's going to be some labor fighting over this, right? And the Rinzo is eager to fuck with the union. So he his proposition is like, I'm going to turn all of our baggage handlers and ticket agents into temporary employees, right?

I'm just going to replace the unionized guys with temps, which is like a standard tactic today and that's starting to be more common in this period of time. He also argues that like, well, we've got all these flights to cities that are like outlying, and so we've, they're really got like one or two flights coming in a day there. So they don't need any full-time employees.

So like for these smaller routes, we'll just hire like college students who need like shitty part-time gigs to be ground employees just when like the flight is departing and arriving. Um, and it's one of those things, part of how he's able to get by with this initially is he tells the pilots union, Hey guys, I want you to keep making money, but like we can't keep paying you all this money if these worthless ground employees are siphoning all your money away. So what do you say?

Yes. So what do you say? Now, all of the pilots don't buy this. all your money away. So what do you say? Yes. So what do you say? Now, all of the pilots don't buy this. There are some pilots at this big intercontinental hotel meeting that are like, well, what if we try to offer better flights and like try to make more money that way? And Lorenzo, he like, has a violent reaction to this idea. He did his Higgins recalls quote, Lorenzo was openly against the better product concept.

He said, the traveling public looks for the dollar sign. What they're interested in is a cheap seat. The ones who don't like our service can go pay higher prices on another carrier. He was very cynical about the public. And this is like, you can see, this is how all of air travel works now, right? It's like, fuck them.

All they want is to see a cheap price. And you know what, we can make them pay more in the long run if we're spirit air. You know, we'll sneak in a couple of hundred dollar charges that they're not seeing. But all these idiots care about is that they see, you know, what looks like a good price initially. We can get them to do all sorts of dumb shit if we trick them. That's Lorenzo's attitude. He's kind of like one of the first guys in air travel who sees where things are going to go here. And he is right.

Like people mostly care about it being cheap. It turns out we're willing to suffer with a lot on planes as long as we don't have to pay too much. Yes, seriously. Yeah, which, you know, whatever that's life. So while he's doing all this, getting each union to agree to a few cuts under the promise that they'll be spared and someone else will get fired, He starts selling Continental aircraft as fast as he can. This puts like $21 million in the bank right away and he gets another big like $30 million

loan from Chase Manhattan. He does this public stock offering to raise more money and over the course of 83 he builds up this big war chest, right? So suddenly Continental has like a weird amount of cash on hand even though they lose like 80 something million dollars that year and Everyone assumes he's doing this. He's saving up money because he's gonna buy another fucking airline because that's what Frank always does But he actually has a different Cunning more fucked up plan. He's going to break the unions once and for all And he's going to do it by declaring bankruptcy. Yeah, yeah.

He is, like I love that every, like all of his goals are just in line with making things just as fucked up for other people as possible just enriching himself. Yeah, I mean, of course, like that's the way at all, that's the way it all works. But he's doing it. This is like, this is one of the first times that he's really, he's creating something,

no one had ever done this before. So basically, his plan is, hey, if you go into bankruptcy, I think you might be able to throw out all your union contracts, right? And their partnerships and shit. Yeah. And no one knew if it would work this way, right?

Like this had not been done before, but basically his plan is like, I'll take this shit to the Supreme Court if I have to. I think eventually they'll rule with me because you know, Reagan's in the fucking White House, right? I can see where the fucking winds are blowing. Yeah. Sikdom, like, Wright brothers are fucking the unions over.

It's like, I don't know if you can. He's like, I don't know if we're gonna dry, man. We're gonna figure it out. Yeah. And if we do, and if it works, welcome to a new age. Yeah, that is exactly what he's saying. And so he would claim, he disliked appearance at Harvard the next year, and he's like, well, I really failed.

And we had to do chapter 11 because I just couldn't make shit work. This is on me. But we have notes that he was sending around the company at the time, where he's like, this is what's going to work. Like the creditors are ready for it. Like we're going to fucking kill the unions with this shit.

Like that's the reason that we're doing this. And at the same time, he starts to execute this very slick media strategy where he's really playing up the company's financial problems and he's blaming it all on workers salaries. Right? Like I failed what I failed in doing is I just couldn't get salaries low enough. You know, we're paying too much on workers and that's why it's impossible to make a profit with this airline. He claimed in a speech at Harvard, quote, what we tried to do was shift the story from it

being a bankruptcy to a labor problem as fast as possible. And this works really well, right? So he's basically, as this is going on, as he's prepping to go into chapter 11, he's renegotiating his contracts with these unions. And instead of working anything out with him, he just keeps at the last moment when they'll think they're about ready to sign a contract. He'll be like, ah, nope, you know what? I actually, I can't do this or I can't do that. We have to go back to the drawing board. So the unions eventually decide to go on strike. And as soon as they go on strike, he furloughs all of the non-striking employees, or the striking

employees, he brings in scabs. And he declares chapter 11, right? So he goes into bankruptcy. And he says, well, now that I'm doing bankruptcy, I want the government to let me revoke all of my union contracts. So yeah, that's the plot, that's what he's trying to do here, and this right up from Texas Monthly describes what happens next.

The airline immediately shut down operations and laid off all but 4,000 of its 12,000 employees. Continental executives said the line would resume flights three days later to selected cities at the low price of $49 one way. Returning workers would face pay cuts, increased productivity requirements, and the elimination of all pensions. The salary of flight attendance would drop from $29,000 to $15,000. Pilots making $89,000 would be paid $43,000. The same salary Lorenzo said he would take in place if his normal $257,000. At press conferences, he'd glassed over

Continental's $50 million in cash reserves. The airline faced running out of money in a few days he insisted. Meanwhile, union leaders and even some business executives denounced him. Wall Street analysts questioned the company's future and competitors rejoiced. So, Frank's plan here, there's like an element

of desperation to this because no one's ever done this before. He's just pretty sure it's going to work. On September 27th, when he reopens the airline and starts offering these cut-rate flares, basically the whole continental fleet remains on the ground. There were only a handful of flights he was able to actually pull out. But since the airline had technically resumed operations, he was able to ask the bankruptcy court to rescind the union contracts. Gradually, Continental starts opening up more and more flights, bringing in scabs to do all the work. But the real

financial health of the company is unclear. He declares at a press conference that like, we're doing great the same day he asks the government to release 10 million in their funds to keep the airline from collapsing. The unions fight back, they go on strike, they're a fuse to go back to work for reduced pay, but they can't stop the scabs from flooding in, and Frank is able to bring in enough workers to keep this minimal schedule operational. Now the union with the most clout and thus the most power are the pilots, and because pilots made bank they had enough money that they were able to like draw funding from other pilots unions to fund their part of the strike. So they start using some of this money to carry out a media campaign where they're basically

trying to be like, all this non-union labor has made flying more dangerous. You might die in the air because of what, you know, what Lorenzo is doing. This may have been true because Continental gets fined like 400 grand because the FAA sees that they're not like, they're breaking up a bunch of rules basically, but no planes crash from Continental in this period. So it's kind of hard to like, you know, yeah, really point the finger. Would it help them if some people had died? Is what I say.

Yeah. Now, one of the things that's really interesting is like how ugly this strike gets. So on November 22nd, two continental pilots get arrested trying to evade a police license checkpoint. Both of these guys are, I think this is like a DUI checkpoint basically, but both of these pilots had been, they'd been driving to the homes of continental pilots

who were scabbing and throwing pipe bombs at their houses. Oh shit. They get caught, hucking pipe bombs and their houses. Oh shit. They get caught, hucking pipe bombs and scaps. Oh no. And it's like, there's this like little war that goes on because the year after these guys get convicted,

a Houston police attendant, Lieutenant gets charged and convicted of selling confidential information about striking continental employees to a private detective hired by the airline. So like, yeah, the fucking nasty strike. Yeah. Yeah.

Soon after all this goes down, a court case is ignited by Frank's chapter 11 move and it gets a ruling from the Supreme Court. They declare that companies in chapter 11 have the right to cancel burdensome union contracts. Now, Congress like seals this up. They pass legislation so that like CEOs can't do what Frank did, but he wins, right? He gets to actually like do this shit. Oh, he got over. So he's like, is he the only one that got it over the line basically?

That got it over the line in this way, right? Like there's still kind of more openings to do this, but Congress kind of makes it harder. But it works out for Frank. His company is still in pretty desperate financial straits, though. And because he's the guy who had let it there, you might have expected him to have suffered financially. And he's like making a big claim to like, well, I've cut my salary, I'm making like way less money, you know, we're all hurting here. This is a lie. Yeah. So basically, he's like, I'm going to drop my salary from like 260,000 to 43 grand.

But he's, that's not like the whole story because like, he's getting bonuses. Obviously, he's like making hundreds of thousands of dollars in bonuses. But he's also, he set shit up so that like, there's this weird, he's basically putting his money into this weird stock transaction that he's like running through an automated subsidiary, which is like doing the, the, the, he's basically like doing like an automated stock trick where he's like buying shares and then like reselling them once they get. Anyway, the way this all works out is that he's able to buy 200,000 shares of his company stock at 50 cents a share for $100,000, but he only has able to buy 200,000 shares of his company's stock at 50 cents

a share for $100,000, but he only has to pay $5,000 because he has Texas air loan him the rest of the money. And then he resells it two years later when it's worth more money and effectively makes like an extra one and a half million dollars for paying five grand where he basically like has the company subsidize his investment. So yeah, he's making, he's doing just fine, right? Um, it's so, but I mean, he's only making 40 grand a year now, right? Yeah, only making 40, he's like one of the first CEOs to be like, oh, if I just tell people

my salaries cut, like these idiots don't understand all the ways we can fuck with stock prices. They don't know, that's like a minuscule. That's not, that's, that's, I don't even need a salary. It's all the fucking the ways we can fuck with stock prices. I don't know, that's like a miniscule. That's not, I don't even need a salary. It's all the fucking bonuses and the stocks. That's not where the fucking money is. But you know where the money really is. Miles. Tell me.

Podcast ads. Oh yeah. Yeah, like these podcast ads. Sacred Skandal, one of the best new podcasts of 2022, is back with a closer look at the darkness surrounding mega-church La Luz del Mundo and its leader, Na Son Joaquin Garcia. They believe that he was Jesus Christ on Earth. It wasn't even so much that he liked sex. He wanted something to pray.

It's the largest cult in the world that no one has ever heard of. For three generations, the Luz del Mundo had an incredible control on his community that began in Mexico and then grew across the United States, until one day. A day of reckoning for the man whose millions of followers called him the Apostle. Their leader was arrested and survivors began to speak out about the sexual abuse, the murder, and corruption. This is just a business and their product are people. They want to know that they will kill you. Listen to all episodes now on the iHeartReadyUp, Apple Podcasts, or whatever you get your podcasts.

911, what's your emergency? You shot her! Oh my God! It's a nightmare we could never have imagined. And a killer who is still on the loose. My small town rocked by murder. There are certain murders I'm scared to discuss. In the 1980s, we're in high school

losing friends, teachers, and community members. One after another, after another for a decade. We weren't safe anywhere. We're teenagers terrified to leave our own homes. Would we be next? Who is killing all the kids? And why? In that moment, I saw rage.

And why do you some want the town town secrets to stay dead and buried forever? I'm not sure why you're digging up all this old stuff again, but I'd be careful. Don't say I didn't warn you, Nancy. Listen to the murder years on the iHeart Radio app Apple Podcasts or wherever you get your podcasts. Hey, what's up y'all? This is Eric Andre, but I made a podcast called Bomming about absolutely tanking on stage.

I'm talking about your most man-ass-er-roll experience as a performer. I tell gnarly stories, and I talk to friends about their worst moments of bombing in all sorts of ways. Bomming on stage, bombing in public, bombing in life, like the time I stole a girl's phone during a set and she dumped on stage and threw a big A-maker punch to my nose. I wanted to know what's the worst way they ever bombed or performed way too drunk or high, and was there ever a time where they thought they were going to crush and they stunk it up.

Subscribe to my podcast Bombing with Eric Andre to hear more crazy stories from me and my friends. I'll have guests like Sam Jay, the Tulsay Sloan, Michelle Butteau, Mac tomorrow. DJ Doug Bound, Saturday Night Live, Sarah Sherman, and more. Listen to bombing with Eric Andre and Will Ferrell's big money players network on the IHR Radio app, Apple Podcast, or wherever you get your podcasts. Ah, we're back. So yeah, it's really interesting.

There's like during this kind of period of time, Frank is also really willing to fuck over his other like the corporate ghouls who like make these moves possible. One of the guys who basically funds his chapter 11 scheme is the chairman of a company called American General Harold Hook. And he floats Frank the money to keep Continental going while he's like fighting with the unions. And the understanding is that like though they will be partners in the airline business once it gets back in the black. But Lorenzo doesn't sign anything with hook like it's a handshake deal.

And so as soon as the airlines making money again, uh, hook is like, well, yeah, now we're running this together. And Lorenzo's like, what do you mean? What do you mean? You thought, you thought a handshake deal meant to do anything? No, bro. No, that wasn't even, that wasn't even like seal the deal. I was like, I see later put her there. And then you left. Nothing to do. What? No, do this time legal. And it's because hook has a lot of money, they go to court over this and like a lot of the case winds up being around how he had used the word partner in these conversations and his argument is like,

how boy is that? No, when I said partner, that was like a colloquial term. It's like, but you know, that's all I meant. Yeah, exactly. How do partner wear a Texas line? Any partner, you know, yeah, with that, I feel like this, we can go into business partner. Yeah, that's kind of what he does.

You can be my business partner. Wait, so I could be your business or your business partner. Okay. So after he breaks the pilots union and he wins this fight, scandal start to erupt that makes it clear how he had like done a lot of the business. So one of the things that he does in order to get investments is he like makes these deals overseas

while the problems are happening in Australia to run a bunch of roots for continental. And it comes out after the fact that he had basically bribed the ceremonial governor of Victoria, which is a thing that exists with free flights in order to help him negotiate to get these roots. And then it came out to the US, the federal judge who'd ruled on their chapter 11 case before it hit the Supreme Court. Right after like the case goes Lorenzo's way, he quits being a judge and gets a job at the

law firm that represented Lorenzo's companies. So like, yeah, this is all fine. Oh, yeah. I mean, yeah, I mean, he's it, he's got all the right moves. Yeah. Yeah, he's, he's, it's going well for a while. But more acquisitions followed, like Frank kind of goes a little nuts after he, he wins this continental case and like, you know, as, as profits start to return, he starts getting more investments. There's a lot of, you know, people are, have a lot of confidence in him because he's this like union buster. So he's able to like basically work his way into taking over eastern airlines next, which is the number three airline in the country.

So he is like, I think that I'm like 20% or whatever, like one, yeah, one fifth of all air traffic in the United States is under Frank's personal control at this point, but also Eastern is like bleeding money and All of his companies kind of are because After he's able to get these kind of like short-term investments and shit, it becomes clear that like well He's just made his airlines a lot shittier like anybody actually likes flying on them his airlines a lot shittier like nobody actually likes flying on them. So this again, it's the same thing that had happened like a couple of years earlier, like he starts hemorrhaging money and I'm going to quote from a write up on avghikuri.com.

Lorenzo was so heavy-handed with subordinates at Eastern that in the end, the airlines employees basically put their own jobs on the line to get rid of him. When he first arrived, he tried to turn the company around by incessantly hammering the unions to make concessions. He enlisted the help of Eastern Airlines' managers, who were company men, and enforced what some called abusive policies against employees. Workers were required to adhere to very strict rules, and were written up for lying about non-existent medical conditions if they called in sick to work.

So many machinists were accused of theft and or drug use that in one year alone, 262 unionized machinists lost their jobs. Psychological warfare was even waged on flight attendants who were forced to collect garbage on flights, a violation of their contract. What if a flight attendant refused to act as a garbage collector? They were fired on the spot for insubordination. So Eastern gets combined with continental frontier andier and people express and, you know, it's one of those things where like his constant cost-cutting,

like he's looking great on paper for a while, but everything starts to fall apart after this. And Frank, you know, is squeezing these people too, so much that like eventually, the Eastern Airlines Machinist Union goes on strike. And up to this point, like 1989, and every time the Union employees had gone on strike against him, Frank had wound up just like beating the piss out of them.

He was pretty confident. George H. W. Bush is in the White House now. He's like, I got this stuff. Yeah, hold my beer. Yeah, hold my beer, but Bush doesn't hold his beer. He refused to create, he refuses to create a mediation board. He basically says, no, the federal government's not getting in on this. Like, you're going to handle this alone. And this is when Frank thinks back to Andrew Carnegie. So he hires mercenaries

in order to like escort his employees off the airfields when they try to lock down the airfields at gunpoint. Like he kind of goes like hard on this shit, but again, without the government backing him, his heavy handed tactics fail. The pilots and the flight attendants unions are so like horrified by what is doing that they go on a sympathy strike. He hadn't thought this was possible. He thought he'd broken them enough that this wouldn't happen, but they ground his entire air like eastern airlines. The third, yeah, largest airline in the US is grounded right after he buys it. And this just causes a cascading

like series of losses that since like bankrupts his companies, right? Right. Obviously Lorenzo gets away rich, but his empire gets broken up and sold off. And like he gets forced out of aviation forever. Part of why is that like the Scandinavians buy continental airlines, but they only do so like if the US government will agree to ban Frank from working in the airline industry for a decade, they're like, we'll pull your fat out of the fire, but you can't let this guy near an airline again. Holy shit. He tries two years later to create an airline called Friendship Airlines, but the Department of Transportation is like it absolutely not. Like you nearly collapse the entire industry.

We are never letting you anywhere near a fucking plane again. And so he just spins the rest of his life as a rich guy. He's got like a capital VC firm. He still makes, he's still alive. He still makes a lot of money. as a rich guy. He's got like a capital VC firm. He's still alive. He still makes a lot of money, but he's not allowed near planes anymore. Anyway. Oh yeah.

Oh, and look, just he's doing venture capital. Yeah, he gets into VC shit. And private equity and private equity, as it always is. Yes, it always is. The thing I learned was always like, whenever you think a business is like shitty, it's and like you're like, but this business was like so big,

what happened? It's usually because private equity just bought it. Yeah. And it's like slowly being, all the good shit is being pulled out, there's no people working. So if you like, when you go into like Toys R Us and it looks like a fucking spooky ghost town, it wasn't because like they were fucking up.

Why I mean, like, I mean, because they were profitable up until private equity bought them. Yeah. So private equity starts hollowing it out. Yeah. So it's good. Yeah. It is good. I wonder.

Now, I just want to know what fucking Frank Lorenzo was up to is have like Savoy Capital or whatever is fucking private equity firms up to. Yeah. Yeah. Maybe that will be a story for another day, but Today was the tale of of why airlines be that way. Yeah, why do they? Yeah, anyway, you got anything to plug miles Just go at miles of gray wherever you see at-based Hell yeah, yeah, yeah, yeah go to at miles of of gray Listen to the daily zeitgeist yeah, um and I don't know

I probably I was gonna make a joke about the pilots and the pipe bombs, but that's probably gonna get us Yeah, anyway You still want to fly. Yeah. Yeah. Anyway. Add free CoolZone Media. Whatever. We're done.

Later. Behind the bastards is a production of CoolZone Media. From more from CoolZone Media, visit our website CoolZoneMedia.com. Or check us out on the I Heart Radio app, Apple Podcasts, or wherever you get your podcast. 911, what's your emergency? or check us out on the iHeart Radio app, Apple Podcasts or wherever you get your podcasts. 911, what's your emergency? It's a nightmare we could never have imagined. And a killer who is still on the loose. In the 1980s, we were in high school losing friends, teachers, and community members. We weren't safe anywhere. Would we be next?

It was getting harder and harder to live in Mompine. Listen to the Murder Years on the I Heart Radio app Apple Podcasts or wherever you get your podcasts. To investigate alleged sexual abuse at Mexico's La Luz del Mundo Mega Church, journalist Robert Garza explores survivor stories of pure evil experiences at the hands of a self-proclaimed apostle who is now behind bars. I remember as a little girl being groomed to be his concubine, that's how I was raised. It is not wrong if you take your clothes off for the apostle. Listen to Sacred Scandal on the IHORR Radio App Apple Podcasts or wherever you get your podcasts.

This is ICT. Over the years, I've compiled thousands of inspiring and thought-provoking quotes. And now I'm passing that knowledge onto you and my new daily podcast. ICT's Daily Game. In less than five minutes, I'll break down why these words matter and reveal personal stories that show them in action in my life. Less than five minutes, I'll break down why these words matter and reveal personal stories that show them in action in my life. Listen to I.E.T.'s Daily Game every weekday

on the I.H.R.D. radio app Apple Podcasts or wherever you get your podcasts and start your morning with me.