Word: lorenzo
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...sell eight boarding gates at the Philadelphia airport to USAir for $70 million. It picked up $15 million more by agreeing to sell its Philadelphia-Toronto and Philadelphia-Montreal routes to USAir. In addition, Eastern leased landing slots on its New York-Miami routes to Continental. Accusations flew that Lorenzo was dismantling the airline even during the strike. Responded Lorenzo angrily: "Had we sold assets quicker, Eastern wouldn't be in bankruptcy today." Along with the shuttle sale to Trump, the deals with USAir will have to be approved by the bankruptcy judge...
...demand. TWA Chairman Carl Icahn confirmed that Eastern's unions had asked him to launch a bid for the airline. Icahn briefly considered such a bid last fall. He found the idea interesting, he said, but did not want to interfere in Eastern's collective-bargaining process. Lorenzo was cool to the suggestion. "Our major goal at the moment is coming to an agreement with our unions," he said. "I can't imagine how having someone like Icahn get involved will do anything but interfere with the process...
...choosing bankruptcy, Lorenzo has won some breathing room, but he has also given up considerable power. Under federal law, Eastern management will have 120 days to submit its reorganization plan to the bankruptcy court. In the meantime, the airline can resume normal operations if it reaches an agreement with its unions. But the rules have changed since Lorenzo's previous foray into Chapter 11 with Continental. Management can no longer toss out union contracts under Chapter 11 without the court's approval...
Eastern's unions welcome the prospect of dealing with a judge instead of Lorenzo. But they too will lose clout under Chapter 11. For one thing, the bankruptcy court has the power to set terms for a contract settlement. But the unions will also be able to file a reorganization plan for the airline. Union leaders gave every indication that the strike will continue. At week's end its focus turned to picketing Continental facilities at airports in Miami, Houston, Denver and Newark...
...dramatic events took their toll on Lorenzo. "I'm not going to kid you by saying that some of those efforts haven't hurt my family and me," he said last week. "They have." Lorenzo maintains that he has done everything in his power to prevent Eastern from folding. He recalls the options that former Eastern Chairman Frank Borman described for the airline in 1986: "Fix it, sell it, or tank it." Unable to fix it, Borman sold it. As the bankruptcy court now begins to address the formidable task of putting Eastern back together again, Lorenzo was facing...