Lorenzo: In the Cockpit

In his undergraduate days at Columbia in the early 1960s, classmates dubbed Frank Lorenzo “Frankie Smooth Talk.” But as chairman of Texas Air in the 1980s, Lorenzo saves his talking for Wall Street and the boardroom, granting few interviews. In a rare 45-minute conversation last week with Richard Woodbury, TIME’s Houston bureau chief, the feisty chairman answered his critics. Some excerpts:

On Texas Air’s postmerger growing pains. Putting together the companies produced more disruption than ever expected. That had the impact of upsetting a lot of our passengers. We underestimated the time it would take to get employees trained. There’s just no book they give out saying, “This is how you merge companies.”

On cutbacks at Eastern Airlines. There is no future for Eastern unless it restructures its labor costs. Eastern has laid out a game plan that makes obvious sense, not one that will win a popularity contest among unionized employees. But it happens to work. When you’re losing the kind of money Eastern is, you don’t grow. You pull back.

< On the coming labor negotiations at Eastern. We have to go through the negotiations to save this company. We’d love nothing more than to invite union leaders in, exchange Sheaffer pens, sign contracts and have a nice deal. The world just doesn’t allow that. I haven’t found anybody else who writes the paychecks at Eastern. That’s something people forget. There aren’t a lot of jobs going looking for homes in South Florida.

On alleged safety problems at Eastern. Pilots pass out postcards to be sent to Government officials when there’s a spot on a windshield or an altimeter a few feet off. It’s their way of negotiating. What it really does is limit what they can negotiate, since they are hurting the company financially.

On the economy. If the consumer in a recession gets picky, he will get picky about airline prices. As a lower-cost airline, we have an obvious ability to withstand a lower price structure. If you have fewer passengers chasing the same number of seats, prices go down. We could do it and be profitable. ((Traffic)) will go up. The question is who gets what share.

On his management style. I’ve been chief executive of this company for 15 years. You don’t lead a company by standing on top of a windmill slashing at the winds. You do it by understanding the pieces of the business and building the people to get it done.

On telling customers the truth. Continental is in the process of changing right now, but not because we’re telling the world it’s hunky-dory. It’s changing because we’ve gone to the public and tried to be straightforward about difficulties we’ve gone through.

On goals. We want to take a viable company into the 1990s. We’ve never had a “size” goal per se, although you do need critical mass to be one of the survivors. Service is going to be critical to how popular our product is. It takes a while for individual perceptions to wear off, but product after product — not just Tylenol — has gone through difficult periods of perception and changed fairly dramatically.