Partner in Deal Helped Start 3 Other Airlines

James Thomas Talbot--Tom to his friends--made a fortune building nondescript factories and warehouses around Southern California. But his first love is airlines.

That’s not surprising, considering that he has helped start three: AirCal, Jet America and Southwest Airlines.

Now Talbot has returned to the airline business, this time in the big leagues. The Newport Beach developer is a partner of Peter V. Ueberroth in the former baseball commissioner’s successful effort to buy troubled Eastern Airlines. The two have been friends for more than 10 years.

Talbot said in a telephone interview from his lawyer’s offices in New York before the final agreement to buy Eastern was reached that he will play an active role in the transition period and may take an active role in the airline’s management.

However, one airline executive said he would be surprised if Talbot became a hands-on manager at Eastern.

“He’s never really run an airline before,” said J. Ray Vingo, chief financial officer at Seattle’s Alaska Air Group, which bought Jet America in 1986. “While he was chairman of Jet America, he was not active in day-to-day operations.”

Talbot acknowledged that while he has not handled day-to-day activities at any of his airlines, he was chairman of Jet America and very active in its operations. His role at AirCal and Southwest was as a lawyer, consultant and shareholder.

The airline connection runs in Talbot’s family. In 1925, his grandfather started the nation’s first air carrier, Western Air Express, which shuttled passengers and mail between Los Angeles and Salt Lake City. The airline, later known as Western Airlines, was merged into Delta Air Lines in 1987.

Started Law Firm

Talbot, 53, was born in Los Angeles, but his parents moved to Newport Beach when he was a child and his roots are in Orange County.

After serving in the Air Force, Talbot graduated from Hastings College of Law in San Francisco in 1963 and worked for a large Los Angeles law firm. Two years later, he formed his own firm so he could spend more time starting AirCal, which was first called Air California. It began flying out of Orange County Airport in 1966.

Talbot and the other founders soon sold most of the struggling airline to San Diego financier C. Arnholt Smith, whose financial empire later crumbled. AirCal was later sold to Orange County home builder William Lyon and apartment builder George Argyros and is now part of American Airlines. Talbot was on its board from 1973 to 1981.

By 1980, he was helping start Jet America Airlines, a tiny Long Beach carrier that also struggled when it ran up against the big airlines on many of its routes to the Midwest.

Even though Talbot, as chairman, did not handle the nuts and bolts of the operation, Fred Davis, who Talbot hired as executive vice president of marketing at AirCal and who held the same post at Jet America, is confident that his old boss can run an airline.

“If anybody in the industry can (make a go of Eastern), it would be Tom Talbot and Peter Ueberroth,” said Davis, now vice president of marketing at Air America, a small Los Angeles airline.

Talbot said in the telephone interview that he and Ueberroth met more than 10 years ago as neighbors in Laguna Beach. They have often played golf together, usually at the Big Canyon Country Club in Newport Beach, and have become good friends, he said.

They have also been business associates at times. Both served, for instance, as directors of E. F. Hutton Group, the investment banking firm sold to Shearson Lehman Bros. in late 1987.

Experience in Travel

Another affluent executive with a crowded resume, Ueberroth came to national prominence as president of the Los Angeles Olympic Organizing Committee for the 1984 Olympic Games. Soon after the games, he was named commissioner of major league baseball. His five-year term ended last Saturday.

Ueberroth’s business experience is in the travel industry. In 1963, he founded First Travel Corp. in Southern California and built it into the second-largest business of its kind in North America. He sold it in 1979 for $10.6 million, earning $4.4 million personally.

Talbot’s airlines have had few or no union workers, but he said he is not worried about a possible clash between management and unions like the one that has dominated the tenure of Frank Lorenzo as head of Eastern. There is no reason for labor and management to be adversaries, Talbot said, especially when both sides have ownership stakes in the company.

Ueberroth’s agreement to buy Eastern involves wage and work rules concessions from the airline’s employees but, in return, grants them 30% ownership of the company.

Talbot is at home in the clubby atmosphere of the Pacific Club--a Newport Beach dining club he helped start while running Jet America--and the posh Big Canyon Country Club in Newport Beach, the place to be seen playing golf in Orange County, where he is known as a pretty fair golfer.

Acquaintances describe him as cordial and low-key. He plays golf fairly frequently and is “definitely not a workaholic,” said Don Shaw, a business partner of Talbot’s.

“When we needed to work 14 hours straight, he was there; but he was not usually at the office at 7 p.m. yelling at people,” Shaw said. “He was very low-key. Crises just rolled off his back.”

Built Industrial Buildings

Talbot had known Shaw socially for several years before Talbot left his job as chairman of developer Dunn Properties Corp. in Santa Ana in 1975 to start Shaw & Talbot. Dunn Properties was a subsidiary of Pacific Lighting, the parent company of Southern California Gas, and is now called Pacific Enterprsies. Talbot joined it as executive vice president in 1970 after selling AirCal because, he said a few years ago, all his friends were getting rich in real estate.

The new company built one-story industrial buildings around Southern California, most of them in Orange County.

“I’m from a construction background--I’ve still got cement on my shoes--and Tom had a lot of financial savvy and a lot of capacity for negotiating,” Shaw said. “We learned a hell of a lot from each other.”

By the mid-1980s, Shaw & Talbot had stopped developing properties but they remain partners and still own numerous buildings together, Shaw said.

Asked why he and Ueberroth wanted to buy Eastern, Talbot said: “Pete has an abiding interest in the travel business, and so do I. The business has a variety of different lures. There’s instant gratification; everything is so visible.”

Times staff writers James S. Granelli and John Charles Tighe in Orange County contributed to this story.