Prospects Appear Dim for Ailing Eastern Airlines : Leadership: Frank Lorenzo wasn’t popular but at least had his image as a deal maker. Now that’s lost too.

Over the years, Texas Air Corp. Chairman Frank Lorenzo has become an enemy to organized labor. But to his friends and admirers, he’s been seen as a nimble-footed deal maker, aviation visionary, steely boss. Even a financial genius.

But the naming of a trustee at Eastern Airlines, wresting control from Lorenzo, is a major blow to Lorenzo’s high-flying image, casting him instead as a wishy-washy negotiator who frittered away a chance to sell the stricken airline, then waffled with its creditors to the point where in the end he lost their confidence--and their respect.

“The issue is Lorenzo, not the management,” insisted a bankruptcy court examiner, David I. Shapiro, during his summation on Wednesday.

“Once he makes a deal, he can’t sleep on it--he renegotiates,” Shapiro told the court. “He is tough to make a deal with.”

Airline labor union leaders--who consider Lorenzo their most hated adversary--have long questioned his ability to run airlines. But now others are raising the same doubts. Bankruptcy Judge Burton R. Lifland late Wednesday certainly did so when he concluded four days of hearings by declaring: “Eastern’s owner-management is not competent to reorganize the estate.”

Daniel A. Hersh, aviation analyst for the Bateman Eichler, Hill Richards brokerage in Los Angeles, said Lorenzo “is not the best operating guy out there in terms of putting out a good product.” Moreover, Hersh said, Lorenzo created “permanent market damage” to Eastern’s reputation, “which never was very good. So maybe (the trustee) can do better at that--and get more labor help, maybe even concessions.

“But,” Hersh added, “it just takes forever to change your image, and it’s an enormous hurdle to overcome to make it viable.”

To be sure, Lorenzo still has his supporters. Carl R. Pohlad, a Minneapolis banker and Texas Air director, has called Lorenzo “the most dedicated and decisive” executive he knows. “He has the ability to recognize an opportunity and do something about it.”

In any case, the question now is whether the rest of Lorenzo’s once-formidable Texas Air Corp. empire can survive and prosper.

For the moment, Texas Air’s other carrier, Continental Airlines, is “marginally profitable” but carrying heavy debts of its own, Hersh said. The airline business was slow last winter and has shown little sign of vigor so far this spring. If Continental goes into the red, he said, Lorenzo may find himself challenged by its creditors as well.

Easterns’ creditors stuck with Lorenzo as long as they did, Hersh said, “because he had won some battles.”

“The question now is,” he added, “whether he can win the war.”

That test should become clearer shortly, since Lorenzo himself says that his ouster from Eastern will free him to focus full attention on Continental.

Many of Lorenzo’s critics say the mess might have been avoided. They point to the chance he had a year ago to sell Eastern to a group headed by former baseball commissioner Peter V. Ueberroth and supported by Eastern’s striking unions. Ueberroth thought that he had a deal, then saw it unravel after deadlocking with Lorenzo over who would run the airline.

Then, this past month, Lorenzo lost the confidence of many of Eastern’s creditors, in part by making promises he couldn’t keep. Creditors were initially promised to be repaid 100 cents on the dollar, but that was lowered to 50 cents and then last month to just 25 cents. It was raised last week to 27.5 cents, before Lorenzo himself raised it to 30 cents during a court appearance on Monday.

Eastern’s machinists struck the airline in March, 1989, after breaking off acrimonious contract negotiations. Pilots and flight attendants joined the walkout in sympathy, forcing the company to seek bankruptcy court protection from creditors.

The unions on Thursday expressed willingness to return to work under the court-appointed trustee, but their bitterness toward Lorenzo remains undiluted.

Times staff writers Robert E. Dallos in New York and Bob Baker in Los Angeles contributed to this story.