Frank Lorenzo

Francisco A. "Frank" Lorenzocite web |url=http://www.savoycap.com/mgmt.htm |title=Savoy Capital Management |accessdate=2008-07-28] (born Birth date and age|1940|05|19) is an investment manager, entrepreneur, philanthropist, and a former airline CEO in the United States.

Since 1990, Frank has been chairman of Savoy Capital, Inc., professionally devoted to asset management, private investments and venture capital, as well as a number of philanthropic activities.Fact|date=July 2008

Born to Spanish immigrants in Queens, New York, Lorenzo graduated from Columbia University in 1961. He had worked his way through university, selling neckties, waiting on tables, and driving Coca-Cola trucks. Harvard Business School admitted him straight from university. Lorenzo graduated with a Master of Business Administration (MBA) in 1963 and worked in the finance divisions of Trans World Airlines and Eastern Air Lines.

In 1989 Lorenzo received the John Jay award for Distinguished Professional Achievement from Columbia University.

Continental Airlines

Pre-deregulation and Texas Air

In 1966 Lorenzo and Harvard classmate Robert J. Carney established an advisory business which provided novel airline management recommendations. In 1969 Lorenzo co-founded an aircraft leasing company called Jet Capital Corporation. In 1972 Jet Capital acquired Texas International Airlines (TI), a struggling regional carrier, based at William P. Hobby Airport in Houston, Texas previously known as Trans-Texas Airways.

Lorenzo pushed new marketing approaches on the U.S. airline industry, including the first regulator approved low fares (first known as "Peanuts Fares" because some were so startlingly low) and other consumer benefits, like being the first carrier to forbid pipe and cigar smoking on airplanes in 1976 and one of the first U.S. airlines to offer fully computerized airport check-in in 1978.

Lorenzo was active in recruiting a talented and energetic work team. In fact, during the late 1970s, TI was an incubator for much of the talent that would subsequently form the core of other U.S. airlines. Former Lorenzo managers were at some point CEOs, founders, or top executives of existing or new airlines, which included: JetBlue, People Express, TWA, New York Air, Midway Airlines, Chicago Air, Presidential, and others.

The combination of cost rationalization with marketing, pricing, and service innovations returned TI to profitability and in 1977, Lorenzo was awarded the "Aviation Week and Space Technology" Laureates Award during an event held at the Smithsonian Institution's National Air and Space Museum.

New York Air

In 1980 Lorenzo created a holding company for TI called Texas Air Corporation. Shortly after forming Texas Air, Lorenzo started a new airline called New York Air (NYA), the first post-deregulation airline. New York Air was based at New York's LaGuardia Airport, very near the Queens neighborhood where Lorenzo grew up. New York Air would become Lorenzo's challenge to the expensive Eastern Airlines Shuttle, and provided cheaper and more frequent (hourly) flights between New York, Boston and Washington-National. The ALPA pilots' union fought it vigorously.

New York Air grew rapidly, adding scheduled services from LaGuardia to Cleveland, Buffalo, Detroit, Louisville, and other cities, before eventually being folded into today's Continental Airlines.

Continental Airlines

In 1981 Texas Air initiated the takeover of Continental Airlines. Texas International was merged into Continental Airlines in June 1982. TI ceased to exist and the "new Continental" relocated its headquarters to Houston. Lorenzo was determined to build Continental into a low-cost full-frills airline, focusing on profitable routes, in order to reach sustainability in the new free-for-all deregulated marketplace.

Lorenzo took Continental into Chapter 11 bankruptcy in September 1983 after extensive negotiations with labor unions proved unsuccessful. Bankruptcy, up to 1984, allowed immediate cessation of union contracts and imposition of new labor conditions, subject to later Court approval and revision. A more streamlined Continental emerged out of bankruptcy shortly after the original filing and the Bankruptcy Court approved management's measures.

In 1985, Texas Air attempted a takeover of Trans World Airlines. Although TWA's management favored Lorenzo over Carl Icahn, TWA's unions feared Lorenzo and negotiated special concessions with Icahn. TWA's Board eventually accepted Icahn's offer.

Frontier and People Express

In 1985, Lorenzo's Texas Air Corp. made an offer for a Denver-based regional carrier, Frontier Airlines, opening a bidding war with People Express, which was headed by Lorenzo's former TI associate Don Burr.

PeopleExpress placed the highest bid and paid a substantial premium for Frontier's high-cost operation. On August 24, 1986 Frontier filed for bankruptcy and ceased operations. Texas Air acquired PeopleExpress on September 15, 1986, at the same time gaining Frontier, which reinforced Continental's already formidable Denver hub.

On February 1, 1987, People Express, New York Air, and several commuter carriers were merged into Continental Airlines to create the sixth largest airline in the world.

Eastern Air Lines

Lorenzo pursued negotiations with another troubled carrier that suffered from the deregulation marketplace, Eastern Air Lines. Texas Air acquired Eastern on February 24, 1986 and started working on its turnaround and possible integration with Continental.

Some of Eastern's assets were used to create a world-wide reservation system, System One, and Continental's hub at Newark Airport. Lorenzo divested non strategic assets such as the Eastern Shuttle, which was sold to Donald Trump, and the South American route system, sold to American Airlines.

The machinists', flight attendants', and pilot unions struck in 1989. On 3 March 1989, President George H. W. Bush issued a statement outlining his decision not to act on a National Mediation Board recommendation to appoint a presidential emergency board to attempt to reach a labor agreement. ["Statement on the Labor Dispute Between Eastern Airlines and the International Association of Machinists and Aerospace Workers" John T. Woolley and Gerhard Peters,The American Presidency Project [online] . Santa Barbara, CA: University of California (hosted), Gerhard Peters (database). http://www.presidency.ucsb.edu/ws/?pid=16726] In addition, a Congressional bill designed to establish a commission specifically to "investigate the labor dispute" [H.R. 1231, To establish a commission to investigate and report respecting the dispute between Eastern Airlines and its collective bargaining units, and for other purposes. [http://thomas.loc.gov/cgi-bin/query/z?c101:h.r.1231.enr:] ] was vetoed by Bush on 21 November 1989; [Bush, George H. W.. "George Bush Presidential Library and Museum :: Public Papers - 1989 - November." George Bush Presidential Library and Museum. 21 November 1989. http://bushlibrary.tamu.edu/research/public_papers.php?id=1247&year=1989&month=11.] ["ESTABLISHING EASTERN AIRLINES LABOR DISPUTES EMERGENCY BOARD--VETO MESSAGE FROM THE PRESIDENT OF THE UNITED STATES (H. DOC. NO. 101-116) (House of Representatives - November 21, 1989)" [http://thomas.loc.gov/cgi-bin/query/R?r101:FLD001:H09625:] ] the veto was sustained by the House of Representatives on 7 March 1990. [cite web |author=Pytte, Alyson |title=LABOR: House Sustains Bush's Veto Of Eastern Strike Measure |publisher=CQ Weekly Online |date=1990-03-10 |p=745-745 |url=http://library.cqpress.com/cqweekly/WR101408719 |accessdate=2008-01-20] The Bankruptcy Court named a trustee to run Eastern in April, 1990. Eastern ceased operations on 18 January 1991 and its assets were liquidated. [cite news |author=Salpukas, Agis |title=Eastern Airlines Is Shutting Down And Plans to Liquidate Its Assets | url=http://query.nytimes.com/gst/fullpage.html?res=9D0CEEDC1138F93AA25752C0A967958260&sec=&spon=&pagewanted=print |date=1991-01-19 |accessdate=2008-07-28]

Divestiture from Continental

In 1990, after having been CEO of Continental and Texas International for 18 years, Mr. Lorenzo sold his controlling interest in Continental Airlines to Scandinavian Airlines System, and stepped down from his CEO role to pursue other entrepreneurial and investment ventures. During his eighteen year tenure, the airline grew from 15 jet aircraft and revenues of $73 million, to 350 jet aircraft and revenues of over $5 billion.

Investment Manager

After the sale of his interest in Continental, Lorenzo founded Savoy Capital, Inc. in 1990 in Houston, TX. Savoy is a private investment firm largely investing for its own account, but which also invests on behalf of accredited outside investors.

Philanthropy

Lorenzo is a trustee of The Hispanic Society of America, an institution with a free-entrance museum of Art. The museum is located in NY, and houses the largest collection of Spanish art outside Spain, with major paintings by Velázquez, Goya, Zurbarán, El Greco, and Sorolla.

He is additionally a trustee of the Woodrow Wilson National Fellowship Foundation located in Princeton, New Jersey.

Lorenzo is also involved as an director, donor, or advisor to several additional arts and charitable organizations, including the International Advisory Board of Catalonia, Spain.

References

* Roy Rowan "From Mao to Now, a reporter's fifty-year pursuit of Powerful People" (ISBN 0-7867-0312-1), Carroll & Graf Publishers, Inc.
* Buckley, William F. Jr., [http://www.findarticles.com/p/articles/mi_m1282/is_n18_v42/ai_8859948 Frank Lorenzo & the free market] in "National Review", September 17, 1990
* [http://www.tsha.utexas.edu/handbook/online/articles/view/TT/ept1.html The Handbook of Texas] . Texas Air.