Monday, September 08, 2008

FAA History Lesson -- September 8 (08)

From the FAA Historical Chronology, 1926-1996...

”Sep 8, 1993: An administrative law judge recommended that DOT deny the application of Friendship Airlines, later renamed ATX, to operate as an air carrier. The company had been founded by former Texas Air chairman Frank Lorenzo. Although DOT ordered the judge to reopen hearings, he reconfirmed his recommendation on Dec 22. On Apr 5, 1994, DOT rejected the application, citing past safety and regulatory compliance problems experienced by airlines run by Lorenzo. “

While searching through Frank Lorenzo’s sordid past (again), I ran across an article from none other than William F. Buckley. For those not familiar with Mr. Buckley, he was an intellectual giant of the Conservative moment with an interesting history. He had the strangest speaking style and was most noted for sending people scurrying after their dictionaries, trying to decipher what he had said.

I thought I would provide some quotes from Mr. Buckley’s 1990 article -- with an eye on history.

” I wish there were an insurance policy one could take out in defense of capitalism. I could imagine that the premiums would have been oversubscribed to an Adam Smith Fund to Retire Frank Lorenzo. “

Adam Smith (and his “invisible hand”) is the most-favored economist of the Conservative movement. His masterpiece, The Wealth of Nations, was written in 1776 -- a very patriotic year.

” As it stands, Mr. Lorenzo is fetching between $14 and $18 per share of stock, which is about double what the stock is selling for. When this was pointed out to him, he remarked airily that Continental stockholders should have sold out a year or so ago. The moral would appear to be that a shareholder of a company run by Lorenzo should get rid of his stock as soon as possible. “

Hindsight, it appears, is 20-20 -- even in Mr. Buckley’s eyes.

”When he took over Continental, what he did was vacate company personnel contracts by the device of letting Continental go bankrupt-and then restoring it, contract free. That device is not in and of itself dishonorable, and the objective was to save the company and to put it back on a solid footing.“

An interesting idea of dishonor. Almost as interesting as the way Mr. Lorenzo broke contracts -- which could easily be defined as failure to honor your word.

”Eastern Air Lines, which Lorenzo purchased and attempted to rehabilitate, answered him by going on strike in the spring of 1989, a strike led by the machinists (who were then led by the labor-union version of a Frank Lorenzo, Mr. William Winpisinger, a socialist more concerned with the class struggle than with the fate of his union members). “

Ah, never mind the sins of Mr. Lorenzo. Mr. Winpisinger was a “socialist” (I’m betting he was actually a Democrat. Maybe even a Republican) which automatically makes him worse.

” Frank Lorenzo was not named by the Justice Department as one of the nine defendants in a lawsuit alleging that necessary maintenance on Eastern planes was signed off on but not performed. But assuming the complaint is not frivolous, under Frank Lorenzo one of the proudest airlines in U. S. history was prepared not only to humiliate and impoverish its workers, but to run the risk of killing its dwindling patrons. “

“...prepared not only to humiliate and impoverish its workers, but to run the risk of killing its dwindling patrons.“ That sounds awfully familiar to me. Does it sound familiar to you ? I wonder...what agency of the U.S. Government has cut its new worker's wages 30% and is driving its older workers out the door as fast as it can with its imposed work rules ? I know.

”It is a burden of the marketplace system that it is often practiced by men and women of low moral standards. “

Pity the poor marketplace. Can you spare a trillion or two to help it out ? I sure hope so. Mr. Lorenzo wasn’t the marketplace’s only problem child. It turns out, he was more like a role model.

Don Brown
September 8, 2008

No comments: