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Airline Dealmaker Frank Lorenzo Says Doug Parker Got It Right

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Subsequently, Lorenzo initiated efforts to acquire larger airlines National and TWA, accumulating shares in the stock market. When the efforts failed, he sold the shares at a profit. In the case of National, he sold out to Pan Am , which then took over National in one of the worst airline acquisitions ever.

"You didn't have to go to UT (University of Texas) to realize that it didn't make business sense to buy a company with a lower cost structure and then raise all the employees to your standard," Lorenzo said. When the National bid started, TIA's net worth was $12 million; the stock sale produced $45 million of profit.

Besides merging TIA with Continental and Continental with People Express and with Frontier, Lorenzo started New York Air from scratch and acquired Eastern, which was operated separately by his holding company, Texas Air Corp. , in 1986.

Throughout his career, Lorenzo battled labor, using bankruptcy to force concessions at Continental. But in 1989, when he tried to force concessions on the International Association of Machinists at Eastern, the union struck and was followed out by flight attendants and pilots, forcing the carrier into bankruptcy court. There, a judge took control from Lorenzo and awarded it to a trustee, who ran Eastern until it failed in 1991.

It should be said that other models exist for building an airline. Ed Colodny, who led US Airways from 1975 to 1991, presided over four mergers . He was generally liked by employees, who called him "Uncle Ed," and labor problems were rare. But even after the four mergers were completed, US Airways was not big enough to break through to becoming a global carrier. Essentially, starting out in 1939 as a regional carrier, when American, Delta and United were already major trunk carriers, meant that US Airways would never acquire the heft to enable its name -- which changed three times -- to survive.

Lorenzo loves to talk about the airline industry, but said he has no regrets about leaving it in 1990. "I was CEO of Continental and its predecessor for 18 years," he said. "I put in my time. Afterwards, we set up a private investment business, Savoy Capital, in Houston and New York, and I love what we do now."

-- Written by Ted Reed in Charlotte.