Ueberroth’s O.C. Partner Earned Wings
James Thomas Talbot--Tom to his friends--made his 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 since they were neighbors in Laguna Beach more than 10 years ago.
In an interview from his lawyer’s offices in New York before the final agreement to buy Eastern was reached, Talbot said he will play an active role in the transition 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.
Talbot, 53, was born in Los Angeles, but his parents moved to Newport Beach when he was a child, so his roots are in Orange County.
After serving in the Air Force, Talbot graduated from Hastings College of the 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.
In 1967, Talbot said, he helped an investor group in Dallas to start Southwest Airlines.
Jet America Struggled
In 1980, he helped start Jet America Airlines, a tiny Long Beach carrier that 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--whom 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 were, for instance, directors of E. F. Hutton Group, the investment banking firm sold to Shearson Lehman Bros. in late 1987.
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, he was named commissioner of major league baseball. His 5-year term ended 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--such as the one that has dominated the tenure of Frank Lorenzo’s 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 concessions on wages and work rules from the airline’s employees. In return, the agreement cedes a 30% ownership of the company to the workers.
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 described 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.”
Talbot had known Shaw socially for several years, then Talbot left his job in 1975 as chairman of a developer firm, Dunn Properties Corp. in Santa Ana, to start Shaw & Talbot.
Dunn Properties was a subsidiary of Pacific Lighting, which is now called Pacific Enterprises and is the parent company of Southern California Gas. Talbot joined Dunn as executive vice president in 1970 after selling AirCal because, he said, all his friends were “making money and having fun” 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 and Talbot had stopped developing properties, but they remain partners and still own many 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.
JAMES THOMAS TALBOT
Age: 53 Residence: Newport Beach Education: Stanford University, economics degree, 1957 Hastings College of the Law, 1963 Military: U.S. Air Force, 1958-62, captain Employment: Walker, Wright, Tyler & Ward, Los Angeles Law firm associate, 1963-1965
Gates, Talbot, Morris & Merrill, Los Angeles law firm partner, 1965-1969
Dunn Properties Corp., Santa Ana 1969-1975, president, 1971; chairman, chief executive, 1972 Shaw & Talbot, Newport Beach partner, 1975-present Airline Deals: Air California, 1966 co-founder, director Southwest Airlines, 1967 lawyer-consultant in its formation
Jet America, 1981 co-founder, chairman, 1981-87
