Francisco A. Lorenzo took the helm at Texas International Airways in the 1970s and transformed the fledgling carrier into Texas Air Corporation, one of the biggest airlines in America.
He is known for pioneering deep airfare discounts. Also, due to the way he handled labor disputes, he gained a reputation for toughness and cost consciousness.
Francisco a. Lorenzo – Small Costs, Big Airlines
Born to Spanish immigrant parents in Queens, NY in 1940, Lorenzo spent his early years in public schools. In 1961, he finished at Columbia University and a couple of years later, at Harvard Business School.
He then embarked on a career in the airline industry that mirrored his academic success and ability to rise above his situation. He started in the finance departments of TWA and Eastern Airlines.
Lorenzo established his own company, incorporated as Texas Air by 1980, via major buyouts of such airlines as Continental. He skillfully managed government contacts, allowing his company to benefit from early airline industry deregulation.
Through deregulation, Lorenzo was able to reduce expenses by eliminating the routes that were not making money, while investing in more efficient aircraft to replace outdated ones.
Always competitive, Lorenzo took workers who were not union members, gave them extra equipment from the airline he refinanced, Texas International, and put together New York Air to directly compete in the northeast route of Eastern Airlines.
He ensured Texas Air’s steady growth by taking over Continental Airlines, buying it when it was heavily in debt and its labor deals almost expired. Continental workers went on strike, the airline filed for bankruptcy, and Lorenzo resumed operations during the strike. This forced its striking labor force back to work, defeating the unions.
As CEO, he pioneered marketing tactics such as big fare discounts and his was the first airline to ban smoking cigars and pipes on aircrafts. Lorenzo’s strategies returned the airlines he purchased to profitability.
By 1987, the once-floundering Continental absorbed its competitors, People Express and New York Air. This gave Texas Air 20% control over the domestic market. Continental became the third biggest carrier in the US. Lorenzo became the first airline boss to meet expensive legacy labor costs head on post-deregulation. Continental had 24,000 employees, while its holding company, Texas Air had only 20 employees officially on record, effectively protecting it from the unions.
The Francisco A. Lorenzo Quick Bio
Full Name: Francisco A. Lorenzo
Birthdate: May 19, 1940
Birthplace: Queens, New York
Company: Texas Air Corporation
Key success traits: Fearlessness in making tough decisions; creativity in finding a way around a situation.
Lorenzo’s tenure at Texas Air lasted until 1990. When he tried to put up an airline in 1993 with a group of investors, labor unions put a huge amount of political pressure on the newly elected Clinton administration – and the application was denied because of the participation of Frank Lorenzo.