Lorenzo Says He’ll Stay in Industry, Preserve Eastern

Texas Air Corp. Chairman Frank Lorenzo insisted Wednesday that he was being unfairly vilified by labor unions and that he has no intention of quitting the airline industry. He also repeated his vow not to sell or liquidate Eastern Airlines.

Lorenzo, who is also chairman of Eastern, Texas Air’s strikebound and bankrupt subsidiary, told reporters after the airline holding company’s annual meeting here that the airline industry “is a business I love, one that I think that I contributed a little bit to, and I plan to be around for plenty of years to come--God willing.”

Lorenzo’s comments were in response to recent speculation that he might forsake the business he has been in for 17 years. He said last month that Continental Airlines, another Texas Air subsidiary, might be for sale, and some industry analysts have predicted that his relationship with the unions has been so stormy that he might move into another business.

But Lorenzo said Wednesday, “I have been an airline builder since I have been in the business. During the time that I have been involved with this company, we have looked out for the interests of our shareholders, our employees and the traveling public.

“We have been subjected . . . to a very carefully calculated public relations campaign designed to try to focus the problems of Eastern Airlines on a campaign against Frank Lorenzo. They have been goaded into taking actions based on facts that were not facts, based on statements that were not statements. It is just unfair.”

Strict Security

While Lorenzo was talking, about 100 striking pilots, flight attendants and machinists were picketing the hotel where the meeting was being conducted. They carried signs bearing such slogans as “Texas Air is the airline folding company” and “Continental is feeding the Lorenzo cancer.”

The unions have been on strike against Eastern since March 4 and the airline filed for protection from creditors under federal bankruptcy laws five days later. The striking workers have said they will not return to work until Lorenzo is gone.

Because of Eastern’s problems, strict security precautions were in place at the meeting. Shareholders and journalists were searched and required to go through metal detectors. Dozens of Houston police officers in plain clothes had been hired by the company to maintain order.

At the meeting, Lorenzo told about 200 shareholders that there are good reasons not to sell all or part of Continental, despite the fact that talks with possible purchasers are continuing. He said talks have been held with foreign investors but not with domestic carriers that might be interested in Continental.

On Wednesday in Stockholm, Jan Carlzon, chairman of Scandinavian Airlines System and a member of the Texas Air board, said SAS is not now interested in increasing the size of its 9.7% stake in Continental.

Lorenzo said reasons not to sell Continental include its “emergence from its period of consolidations as a greatly strengthened company that is showing real potential for improved financial results and the fact that my associates and I have been involved with Continental for more than 17 years.”

But in favor of a sale, he said, is the fact that the Texas Air board “has an obvious obligation to examine every possibility to improve shareholder value.”

In another development at the meeting, Eastern President Phil Bakes said the airline has changed its mind and does not plan to sell its valuable South American routes.

Lorenzo also said that Texas Air, for the first time, will give financial aid to Eastern. He said Eastern had not been able to raise enough money from the sale of assets in time for a Friday deadline to pay $98 million into the company pension programs.