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Speaker 1: Ah, what's Miles, my.

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Speaker 2: Miles? How are you doing? Miles? What's Miles? My Miles?

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Speaker 1: Miles? What Miles my Gray? Maybe I just had a

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Speaker 1: bunch of ice cream. Yeah, yeah, you're eating blue ice cream,

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Speaker 1: which is gonna make it look like you were I

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Speaker 1: don't know. I want to say like something grossly sexual

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Speaker 1: about like the Brave Heart guy, because all the blue stuff.

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Speaker 3: But yeah, yeah, yeah, well your alice. Yeah, I did

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Speaker 3: figure out a good joke ahead of time. So yeah,

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Speaker 3: I don't know what you'd say, but I get it.

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Speaker 3: I get where you're going with it.

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Speaker 1: Like you understand what the potential was.

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Speaker 2: Oh yeah, totally. I see.

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Speaker 3: I see the elements on the table for something great.

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Speaker 3: I just didn't know how to put it together either.

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Speaker 2: Yeah.

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Speaker 3: But yeah, this ice cream is so blue that it's

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Speaker 3: I'm a little alarmed how much I like it. And

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Speaker 3: I feel like a fucking child when I order it

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Speaker 3: at this place. But you know, what gives a fuck?

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Speaker 3: Maybe I'm a child.

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Speaker 1: What was your first thing that you ate as a

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Speaker 1: kid and then you ate it again as an adult

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Speaker 1: and you're like, this isn't food?

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Speaker 2: What the fuck? People shouldn't have access to this? Oh

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Speaker 2: my god?

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Speaker 3: There's a few things, but I feel like maybe like

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Speaker 3: shark bites or like gushers.

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Speaker 2: No, gushers are wholesome. Love I mean, I love them too.

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Speaker 3: I mean and I remember back at the old studio

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Speaker 3: we had them there, remember, so yeah, order, yeah.

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Speaker 2: And I remember.

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Speaker 3: But here's the thing, not that I'm saying I disrespect them,

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Speaker 3: but I remember eating them, Like, yo, this is fucking

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Speaker 3: this is just sugar.

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Speaker 1: But sugar mine was always and I still kind of

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Speaker 1: love them. Is those like uh, what do you call it?

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Speaker 1: It's like the stick and then like the pouches of

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Speaker 1: colored sugar.

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Speaker 2: Oh, fun just like.

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Speaker 3: It's so funny, like something, yeah, just chemicals on a dipstick.

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Speaker 2: They just licked over and like what was that stick

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Speaker 2: even made of? It's pure sugar, miles all. The only

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Speaker 2: thing is just raw sugar. It's just pure I guess.

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Speaker 3: The only thing is that, yeah, just like the pouch

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Speaker 3: that it was in was just the only thing that

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Speaker 3: was not sugar.

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Speaker 1: No. And it's like, you know, we're we're recording this

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Speaker 1: the week that I don't know when this will air.

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Speaker 1: But as we're recording this, everyone like there's just a

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Speaker 1: big store where they're like, oh, aspartame causes it can

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Speaker 1: cause you cancer, and like you look into it and

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Speaker 1: it's like, well, if you have like between a dozen

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Speaker 1: and three dozen cans a day, you might get cancer

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Speaker 1: as opposed to like, I don't know, man, if everything

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Speaker 1: like we're all shoveling so much crap and poison into

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Speaker 1: ourselves at all times, I don't know that. I feel

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Speaker 1: like diet coke's not going to be many people's primary

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Speaker 1: risk factor.

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Speaker 3: But whatever, it's And it's also it's pronounced as spark

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Speaker 3: may Okay, we all know that that's but yeah, it's

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Speaker 3: I think that also feels like the kind of thing

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Speaker 3: that like the sugar lobby would come out with too.

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Speaker 2: Funlike sugar which is a problem.

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Speaker 1: Sugar, Yeah, fucking just just do whatever, gat like listen,

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Speaker 1: like statistically, like a third of the people listening to

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Speaker 1: this are doing so well. Blanketed in wildfire smoke and

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Speaker 1: like burning the burning remnant sevassbestos and insulation, Like it's

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Speaker 1: not going to be the aspertain that kills you guys.

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Speaker 3: Take your aspertame, eat your blue ice cream, do it

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Speaker 3: for the sword, you know.

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Speaker 1: Yeah, whatever, it doesn't matter, Like every you're fine, and

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Speaker 1: by fine, I mean doomed, but everything is so it's

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Speaker 1: okay whatever. Anyway, you want to talk some more about

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Speaker 1: Frank Lorenzo, No I do so today. You know, uh,

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Speaker 1: United Airlines is kind of the descendant of Continental, and

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Speaker 1: United Airlines is like an airline, right. I don't think

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Speaker 1: anybody's like, ah, United. I have so many great United experiences.

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Speaker 1: It's also not like the word of the airlines. They're

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Speaker 1: just kind of like right in the middle, yeah, right

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Speaker 1: right in the middle. You know, they're not as nice

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Speaker 1: as like a smaller airline like Alaska, but I will

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Speaker 1: take them over I don't know, fucking American Airlines or whatever,

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Speaker 1: certainly over like Spirit. But I'm never like psyched to

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Speaker 1: get on a fucking United flight either. But people were

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Speaker 1: psyched to fly Continental back back in the day. Continental

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Speaker 1: was like one of the airlines as shit. You know,

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Speaker 1: the Reagan eras kicking off. You know, you've kind of

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Speaker 1: got like the it's like the end of the late

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Speaker 1: Carter era, early Reagan era is when sort of Continental

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Speaker 1: is kind of starting to starting to look its age.

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Speaker 1: You know, even after deregulation, they've kept their high fees

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Speaker 1: and they've kept their passenger perks, so like, passengers consistently

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Speaker 1: rate it as like one of the best airlines in

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Speaker 1: the world, but it's not making a lot of money,

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Speaker 1: whereas TI, the airline Lorenzo runs, is basically the opposite.

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Speaker 1: It's a shitty budget airline that cannot make or that

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Speaker 1: like makes a profit, but because it's it's shitty enough

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Speaker 1: for people to afford. In nineteen seventy nine, Continental lost

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Speaker 1: more than thirteen million dollars, and the bleeding accelerated. In

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Speaker 1: nineteen eighty, the company gets a new CEO at this time,

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Speaker 1: a guy named Alvin Feldman, and Alvin is generally remembered

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Speaker 1: that should be a spoiler as a nice guy and

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Speaker 1: a diligent businessman of the old style. And he's like

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Speaker 1: he's trying to stop the bleeding, but he doesn't want

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Speaker 1: it to like change its character. He tries to like

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Speaker 1: emerges it with this other company. He's hoping that like

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Speaker 1: he can keep it, you know, special and somehow make

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Speaker 1: it profitable. But Continental, in addition to like dealing with

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Speaker 1: changes in the market, is also feuding with their workers

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Speaker 1: over new contracts. And because they're not as big as

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Speaker 1: like American or TWA, you know, they've got a pretty

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Speaker 1: small market cap, which means that you can actually purchase

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Speaker 1: a controlling interest in their stock for surprisingly little money.

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Speaker 1: And Lorenzo, to Lorenzo, this is like a shark smelling

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Speaker 1: blood in the water, right, So it's total market values

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Speaker 1: like one hundred and fifty million, and because again the

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Speaker 1: stock market's nonsense, the company is worth way more than

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Speaker 1: one hundred fifty million. If you just like add up

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Speaker 1: all of their planes, they're worth a lot more than that.

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Speaker 1: But because the business isn't doing as well as it

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Speaker 1: used to be, like, their market cap is shit, and

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Speaker 1: so he's able to Lorenzo's able to basically like buy

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Speaker 1: up a bunch of big investors who have like interests

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Speaker 1: in it and like work out a buy like he's

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Speaker 1: he just basically starts eating up more and more and

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Speaker 1: more of like getting closer to a controlling interest in Continental,

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Speaker 1: because if he's able to get it, he'll wind up

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Speaker 1: with way more value in like assets he can strip

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Speaker 1: that he's actually spending on this thing. So this process

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Speaker 1: starts for him in February of nineteen eighty one, and

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Speaker 1: Feldman when he realizes, oh my god, this guy who

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Speaker 1: is like the corporate raidar of the airline industry is

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Speaker 1: buying up my beloved airline. He tries to go to

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Speaker 1: war with him, right, but Lorenzo is a lot fast,

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Speaker 1: he's a lot smarter, uh in dirty huh and fights

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Speaker 1: dirty or uh he fights dirty. Feltman's like a nice guy.

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Speaker 1: He's going to try the high minded way of fighting

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Speaker 1: back and it's not going to work for him. But

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Speaker 1: like so he as Continental. He goes to court to

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Speaker 1: try to get the CAAB to rule in favor of like,

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Speaker 1: you know, basically saying that, like, hey, for Lorenzo to

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Speaker 1: buy up Continental because he already owns these other airlines

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Speaker 1: is anti competitive. But the CAAB rules in Lorenzo's favor

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Speaker 1: because it's the Reagan era. Texas Monthly writes quote. While

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Speaker 1: the fifty three year old Feldman remained at Continental's Los

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Speaker 1: Angeles headquarters, Lorenzo was everywhere, flying around the country, lobbying legislatures,

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Speaker 1: institutional investors, and even the media. Lorenzo made many promises.

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Speaker 1: He wrote California officials that he had no plans to

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Speaker 1: move Continental headquarters or any of its operations out of

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Speaker 1: Los Angeles. He said he had no intention of firing employees.

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Speaker 1: He said he wouldn't sell planes to raise money. Within

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Speaker 1: two years he had done them.

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Speaker 3: All. Yeah, what worry you, I'm not gonna do it.

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Speaker 3: I'm not going to like sell the planes I see

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Speaker 3: here for money.

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Speaker 2: No, why would I do that? If I come on? Guys,

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Speaker 2: come on, as.

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Speaker 1: A rule, if you're like a regulator and like somebody

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Speaker 1: starts making specific promises about what they won't do, if

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Speaker 1: you let them do something they want to do, those

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Speaker 1: are the things they plan on doing, right, Like they're

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Speaker 1: telling how themselves. Yeah, So Continentals unions are kind of

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Speaker 1: the most effective defense that Continental has against Lorenzo, and

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Speaker 1: kind of working with Feldman, they come up with what

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Speaker 1: seems like a pretty good idea on paper. It's it's

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Speaker 1: what's called an employee stock ownership plan or ESOP, And

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Speaker 1: basically the idea that these unions work out with Feldman

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Speaker 1: is that workers are going to buy control of the company.

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Speaker 1: This could work out for them because federal law gave

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Speaker 1: ESOPs really nice tax breaks and they're able to kind

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Speaker 1: of work with some banks to get like there's like

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Speaker 1: one hundred and eighty five million they need to get

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Speaker 1: in financing for this. So Feldman's on board the unions

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Speaker 1: start like making a national campaign basically telling people, hey,

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Speaker 1: you know you have all these nice fond memories of Continental,

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Speaker 1: you know, where this like prestigious airline, and you know,

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Speaker 1: we want to stop these ghoulish, soulless Reaganites from taking

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Speaker 1: over our beautiful airline and it'll be worker owned. And

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Speaker 1: it's like it shows you how different the world is that,

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Speaker 1: like the Texas legislature passes a resolution like cheering on

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Speaker 1: the effort, right, actually opposing a Texas based company trying

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Speaker 1: to take over the airline.

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Speaker 2: Yeah.

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Speaker 1: Well because like if you think about it, like I'm

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Speaker 1: not going to say necessarily that there's less culture war

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Speaker 1: brain poisoning, but it's different. And conservatives in this era,

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Speaker 1: you know, they voted for Reagan obviously, but there's still

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Speaker 1: this attitude of like, well, these are working The idea

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Speaker 1: of like working class people taking over their own airline

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Speaker 1: is going to be more attractive to a lot of

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Speaker 1: conservatives than like letting this ghoulish, bloodless Harvard grad take it.

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Speaker 3: You know, right, Whereas now it's completely inverted and it's

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Speaker 3: like the thought of like any worker powers it's like no, no, no, no,

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Speaker 3: like than fire bomb them.

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Speaker 1: Yeah, he would post Lorenzo would post a picture of

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Speaker 1: himself in jeans and a shotgun, and people would be

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Speaker 1: like assassinating pilots on the on the highway, you know.

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Speaker 1: So there was a This is like a potentially you know,

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Speaker 1: cool idea, but there's a problem. The plan needs majority

201
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Speaker 1: approval at a shareholders meeting for like the employees to

202
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Speaker 1: be able to do this thing, and Lorenzo had forty

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Speaker 1: eight point five percent of the stock at this point,

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Speaker 1: which is enough to block like anything from happening. Continental

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Speaker 1: goes to the New York Stock Exchange and the California

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Speaker 1: Corporation Commissioner's office to try and like force through the

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Speaker 1: ESOP plan without a vote, but they get denied, and

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Speaker 1: on August seventh, because it's not working out, the banks

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Speaker 1: who'd offer to help finance it withdraw their financial commitments,

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Speaker 1: and like you know, it falls apart. So this doesn't

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Speaker 1: work tragically, like the the employees are not going to

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Speaker 1: be able to buy their own airlines. And so two

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Speaker 1: days after the banks pull their financing, while Lorenzo continues

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Speaker 1: his full court press to take over Continental, the CEO

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Speaker 1: Feldman issues a press release telling all of his workers

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Speaker 1: that the esop plan is no longer possible, he tells

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Speaker 1: them sadly. He's like, and this is like a pretty

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Speaker 1: emotional letter for him. He's like, you know, we can't

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Speaker 1: get financing. You know, this has kind of sunk our chances.

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Speaker 1: I'm so sorry that this failed. And then after sending

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Speaker 1: this out, he leaves his office at LAX in the

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Speaker 1: middle of the day, goes on a little shopping trip,

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Speaker 1: and he returns soon after with a package. Frank works

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Speaker 1: the rest of the day winding down his control of Continental,

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Speaker 1: preparing to hand it off to Lorenzo, and then at

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Speaker 1: a little after seven pm Pacific standard time, he calls

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Speaker 1: the security desk and he asks them to turn off

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Speaker 1: the lights in his office. Then he gets on the

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Speaker 1: couch and he shoots himself through the head.

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Speaker 2: Oh my god, No, it's like it's pretty bleak.

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Speaker 3: The fuck some Paul Thomas Anderson, Yeah, it kind of is,

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Speaker 3: like it's it's this really like intense story.

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Speaker 1: There's a lot about side kind of the changing of

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Speaker 1: the guard, just sort of within the capitalist system from like,

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Speaker 1: you know, Feldman, I'm not going to pretend al felt.

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Speaker 1: I'm sure he wasn't like, uh, you know, a fucking

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Speaker 1: flawless hero. But it comes from this era where like, yeah,

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Speaker 1: like we're capitalists, but there's this understanding of like the

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Speaker 1: prestige of the business some things are it's not purely

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Speaker 1: about maximizing profit as opposed to Frank Lorenz was like, no,

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Speaker 1: nothing matters but short term stockholder value. Yeah, because and

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Speaker 1: it's like, yeah, Feldman is like from there of like

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Speaker 1: you provide people a service and they give you money,

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Speaker 1: and you want it to be fair and you give

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Speaker 1: them some kind of value back, and this guy's like

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Speaker 1: a fuck all that all that shit, let's sell your

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Speaker 1: fucking planes, dude, get the fuck out of my face. Loser,

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Speaker 1: like Feldman just can't exist in the era of Frank Lorenzo.

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Speaker 2: So no very like no country for old men. It

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Speaker 2: really is.

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Speaker 1: Yeah, it's what if like this, it's one of the

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Speaker 1: more like yeah Cohen brother z e fucking stories in

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Speaker 1: the history of like modern capitalism. And that's like this

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Speaker 1: that's the day that the shit fell through basically that yeah, yeah,

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Speaker 1: kind of well like a couple of days after right,

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Speaker 1: like that was like but that was sort of like

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Speaker 1: the last of yeah that that rule. Yeah, and it's

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Speaker 1: one of those things it's interesting. I haven't seen a

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Speaker 1: lot of like you know, we've got we do get

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Speaker 1: to bring up the Coen Brothers. We've gotten a lot

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Speaker 1: of like movies about like you know, those the corporate

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Speaker 1: gul or the capitalist goruls of like the train industry, right,

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Speaker 1: like stuff like that, right, and a lot of more

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Speaker 1: modern stuff. I've never actually seen this period depicted. But

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Speaker 1: it's pretty like we're going to go over some of this,

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Speaker 1: like what's happening this like battle between like the unions

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Speaker 1: and the airlines and like this old attitude that's less

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Speaker 1: competitive of like how airlines should be in the new one. Obviously,

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Speaker 1: like none of these people are. You know, when we

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Speaker 1: talk about the old way of things, it is worth

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Speaker 1: noting part of why it falls apart is that it

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Speaker 1: can't make money because it was never that was never

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Speaker 1: the primary purpose. So you know, it is it is complex.

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Speaker 1: It's certainly more complicated than a lot of this stuff

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Speaker 1: we talk about. But yeah, Frank Lorenzo is like reached

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Speaker 1: to by the New York Times and he issues a

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Speaker 1: statement being like, oh, you know, mister Feldman was a

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Speaker 1: was a great guy. You know, I'm so sorry to

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Speaker 1: his family, Like.

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Speaker 2: Oh my God.

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Speaker 1: Yeah, Like you don't need to say anything, man, we

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Speaker 1: know you don't care, Like, of course, you know, nobody

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Speaker 1: expects that from you. Yeah, your job is to not

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Speaker 1: have a soul. Frank Lorenzo, it's fine.

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Speaker 3: He's like, yeah, but I gotta say this stuff, you know,

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Speaker 3: so I like, human, you.

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Speaker 1: Got to say the thing. Union Resistance died with Feldman.

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Speaker 1: Texas Air takes over Continental the next month, and in

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Speaker 1: short order the two airlines are combined, which means Frank

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Speaker 1: Lorenzo now controls effectively the seventh largest airline in the

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Speaker 1: company or in the country. Now, there's a downside to

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Speaker 1: acquiring a big, bleeding, giant giant like Continental. It is

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Speaker 1: a money sink, right, There's a reason why it was

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Speaker 1: on the table to buy. The airline industry is in

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Speaker 1: a very new place, and it's kind of reeling from

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Speaker 1: alt from deregulation, from all these sudden changes at the

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Speaker 1: end of the Carter era and then at the start

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Speaker 1: of the Reagan era in August of nineteen eighty one,

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Speaker 1: you have the air traffic controllers strike, right, and this

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Speaker 1: is basically air traffic controllers.

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Speaker 2: It's like a hard gig.

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Speaker 1: The hours are shit, they're not making enough money, so

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Speaker 1: they decide to go on strike.

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Speaker 2: Disaster if you fuck up, so many people die.

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Speaker 1: But when they decide like most people again like if

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Speaker 1: you've got I don't know, like people who work at

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Speaker 1: Albertson's grocery stores go on strike, you know, that can matter.

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Speaker 1: That matters in a community. It certainly matters to Albertson's,

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Speaker 1: but like there's other grocery stores, you know, like the

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Speaker 1: the overall impact to the country isn't massive. Whereas if

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Speaker 1: all the air traffic controllers go on strike, like good,

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Speaker 1: you can shut like yeah, and you know, obviously that's

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Speaker 1: not something a guy like Ronald Reagan is going to

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Speaker 1: think should be acceptable. He is fundamentally against the idea

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Speaker 1: that any union should have as much power as the

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Speaker 1: air traffic controllers do. So he calls their strike apparel

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Speaker 1: to national security, and he orders them back to work

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Speaker 1: at the risk of losing their jobs. And there's still

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Speaker 1: elements of this in like air unions. I think we

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Speaker 1: all remember when like the stewardesses union put an end

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Speaker 1: to that, like the fucking budget, like the government shut

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Speaker 1: down basically by being like, well, what if planes can't

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Speaker 1: go in the air, how would you fuckers feel that

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Speaker 1: you know, right, right right? And this is yeah, so

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Speaker 1: uh there's a yeah. Basically, Reagan's like, yeah, if you

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Speaker 1: guys don't go to work, I'm going to fire everybody.

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Speaker 1: And the union calls Reagan's bluff, and Reagan does, in

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Speaker 1: fact fire everyone, and he bans all of these air

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Speaker 1: traffic controllers who had struck from federal service for life. Uh.

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Speaker 1: This is very celebrated by conservatives, but it is a

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Speaker 1: fucking disaster for a while because like suddenly all the

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Speaker 1: guys who make air travel possible are gone, right, so

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Speaker 1: they have to fill vacancies. They bring in the military,

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Speaker 1: you know, flight controllers and shit from the military. There's

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Speaker 1: controllers who like, for whatever reason, had worked outside the

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Speaker 1: union and like different, like weird, little kind of niche

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Speaker 1: parts of the industry they bring in, like like retirees

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Speaker 1: and stuff. They bring in like people who had refused

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Speaker 1: to go with the union on the strike. But it

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Speaker 1: takes ten years before FAA controllers staffing returns to normal.

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Speaker 1: The benefit of this for Republicans is that as much

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Speaker 1: of a fuck up as it is for the industry

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Speaker 1: and for flyers and for obviously these controllers, it does.

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Speaker 1: It's almost like a death blow to organized labor, and

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Speaker 1: a lot of ways you could argue that, like you

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Speaker 1: kind of have the labor movement, you know, starting up

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Speaker 1: late eighteen hundreds, early nineteen hundreds, fighting for that eight

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Speaker 1: hour work day, all these other things that we get

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Speaker 1: from organized labor, and labor has a significant degree of

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Speaker 1: power kind of up until Reagan crushes this strike, and

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Speaker 1: it's it's like a it's an epochal change in the

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Speaker 1: way that we conceive of labor in this country.

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Speaker 3: Yeah, I mean it's I feel like the last time

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Speaker 3: we were talking about this was just with the rail

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Speaker 3: workers at the end of the year, and like, oh,

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Speaker 3: what's the government going to do? Because the last time

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Speaker 3: it was the air traffic controllers and look where that

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Speaker 3: got us. But yeah, it is, Yeah, it is true,

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Speaker 3: Like you're there's so many huge fundamental shifts happening, whether

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Speaker 3: it's just like the perspective of what even a business

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Speaker 3: is and what it's meant to do, and like who

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Speaker 3: it's supposed to provide value for to who the fuck

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Speaker 3: even deserves to like, you know, demonstrate that they need

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Speaker 3: better wages or working conditions. Yeah, in such a like

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Speaker 3: cynical way.

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Speaker 1: Yeah, now you know, we can talk more. There's a

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Speaker 1: lot more to say about, you know, Reagan and the

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Speaker 1: breaking of that strike, but that is not the story

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Speaker 1: of today. And while you might expect Frank Lorenzo obviously

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Speaker 1: to be in favor of Reagan breaking the strike, and

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Speaker 1: obviously he like he's a fuck the unions guy, this

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Speaker 1: also has a negative impact on his business because it

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Speaker 1: like he is when he buys Continental, his plan is

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Speaker 1: to basically cut a bunch of like the routes that

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Speaker 1: aren't efficient and launch a bunch of new routes and

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Speaker 1: kind of like uses existing business to make it more effective.

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Speaker 1: But like he can't actually expand or really wildly change

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Speaker 1: the way his airline works and the way that he

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Speaker 1: needs to if there's this like cap on how much

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Speaker 1: air travel can exist because we're out of fucking controllers, right,

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Speaker 1: people Like this is a problem for him, and he's

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Speaker 1: just burnt a shitload of capital to buy Continental, so

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Speaker 1: he needs to be able to expand and show that

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Speaker 1: like he can make a profit. In nineteen eighty one,

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Speaker 1: then Continental reports losses of again when he had bought Continental,

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Speaker 1: they were losing a thirteen million year and eighty one,

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Speaker 1: they lose one hundred million dollars. So it's a little

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Speaker 1: bit of like an Elon Musk type thing where it's like,

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Speaker 1: I don't know, man, maybe this wasn't the best plan.

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Speaker 2: I think I can do something. Oh fuck my life. Yeah,

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Speaker 2: oh shit.

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Speaker 1: You know, some of this is not directly his fault,

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Speaker 1: but it's certainly the fault of like kind of the

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Speaker 1: ideologies he's championed.

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Speaker 2: This like war on the rights of labor.

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Speaker 3: And did he do like a boxing match against another

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Speaker 3: airline exect?

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Speaker 1: Yeah, he does. He actually beats the shit out of

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Speaker 1: Mark Zuckerberg. But at this point, Mark Zuckerberg is just

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Speaker 1: like you've seen some of those old Catholic propaganda cartoons

401
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Speaker 1: with like the babies that are in heaven before.

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Speaker 2: They're wor yeah, exact, that's who he's fighting.

403
00:19:54,800 --> 00:19:58,760
Speaker 1: Yeah, like the like the Catholic anti abortion propaganda angel,

404
00:19:58,800 --> 00:20:11,880
Speaker 1: Mark Zuckerberg of Catholic propaganda. This podcast is sponsored by Catholicism. Catholicism.

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Speaker 2: It's fine, now, yeah, what what mood are you in

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Speaker 2: today's I don't know.

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Speaker 1: I don't know, Sophie. I don't know where I'm coming

408
00:20:24,280 --> 00:20:35,960
Speaker 1: or going here. We are back and Miles. This is exciting.

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Speaker 1: I just found out from you once, once I started

410
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Speaker 1: talking about Catholicism that you are actually engaged in recruiting

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Speaker 1: for a new crusade to retake the Holy Land. But

412
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Speaker 1: because we're nineties kids, the Holy Land is kind of

413
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Speaker 1: the ephemeral concept of playing the N sixty four with

414
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Speaker 1: your with your friends at a birthday party exactly. There's

415
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Speaker 1: still a high death to expected, is that correct?

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Speaker 2: Yeah?

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Speaker 3: Yeah, because as much as we love Golden Eye, we

418
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Speaker 3: are going to be using actual land mines and proximity

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Speaker 3: minds excellent, excellent.

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Speaker 1: Yeah, yeah, yeah, Well find find Miles on a gibsond

421
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Speaker 1: Go and Treon. He's taking donations on both of those

422
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Speaker 1: to reclaim our nineties video game past.

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Speaker 3: And by that, I think you guys know what I

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Speaker 3: really mean. But I'm but you know, before we get

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Speaker 3: the money, it's about N sixty four, Okay.

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Speaker 1: Yeah, uh so nineteen eighty one Continental loses one hundred

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Speaker 1: million dollars and Texa Texas Air is plummeting too. Right,

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Speaker 1: he's brought he had like it was looking like, wow,

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Speaker 1: this guy's he's saved this company. He made it profitable.

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Speaker 1: What a genius he loses fifty million dollars in nineteen

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Speaker 1: eighty one. So this is a disaster. Barons calls it

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Speaker 1: a stockholder's nightmare. And what's actually happening here is that

433
00:21:52,680 --> 00:21:55,399
Speaker 1: a lot of Frank's success, the perception that he was

434
00:21:55,400 --> 00:21:59,840
Speaker 1: this like master of rescuing damaged airlines, was not real success,

435
00:21:59,880 --> 00:22:03,080
Speaker 1: but the result of a rational exuberance. Investors liked how

436
00:22:03,080 --> 00:22:05,320
Speaker 1: we talked about unions, and the market was good for

437
00:22:05,359 --> 00:22:07,440
Speaker 1: the kind of airline he ran, but he was making

438
00:22:07,520 --> 00:22:11,200
Speaker 1: a ton of bad calls too. After the Continental acquisition,

439
00:22:11,240 --> 00:22:15,440
Speaker 1: he launched a new major marketing rollout that had flopped disastrously,

440
00:22:15,800 --> 00:22:19,160
Speaker 1: making Continental in this period the only airline that sees

441
00:22:19,200 --> 00:22:22,919
Speaker 1: both revenue and passenger load drop for the quarter. So

442
00:22:24,320 --> 00:22:26,439
Speaker 1: this is kind of revealed that he's not a great

443
00:22:26,520 --> 00:22:30,719
Speaker 1: airline manager. He was just good at convincing stockholders that like,

444
00:22:30,880 --> 00:22:31,760
Speaker 1: that's we're on the open.

445
00:22:31,880 --> 00:22:34,720
Speaker 3: That's how like all these private equity things end up,

446
00:22:34,840 --> 00:22:36,800
Speaker 3: is guys who only know how to make line go

447
00:22:36,960 --> 00:22:39,879
Speaker 3: up end up taking over like healthcare companies, and they're like,

448
00:22:39,920 --> 00:22:41,320
Speaker 3: I don't know, I just know how to make fucking

449
00:22:41,400 --> 00:22:42,280
Speaker 3: numbers look different.

450
00:22:42,359 --> 00:22:44,639
Speaker 1: Yeah, I can make the line go up. Now I

451
00:22:44,680 --> 00:22:47,920
Speaker 1: will say in a little bit of like defensive Lorenzo,

452
00:22:48,119 --> 00:22:50,560
Speaker 1: this is like a real bad time to be running

453
00:22:50,800 --> 00:22:52,679
Speaker 1: most airlines. If you're not one of the top like

454
00:22:52,720 --> 00:22:55,280
Speaker 1: two or three big ones, you're having a lot of trouble.

455
00:22:55,800 --> 00:22:59,119
Speaker 1: Branef collapses at this time, so do a lot of

456
00:22:59,119 --> 00:23:00,720
Speaker 1: the other old giants, and most of them are like

457
00:23:00,720 --> 00:23:03,639
Speaker 1: getting bought up by kind of like the controllers at

458
00:23:03,680 --> 00:23:07,000
Speaker 1: the very top. And Frank has like the seventh biggest airline,

459
00:23:07,280 --> 00:23:10,159
Speaker 1: but there's a pretty big drop off between like the

460
00:23:10,160 --> 00:23:14,120
Speaker 1: top three or four and numbers seven. And what we're

461
00:23:14,160 --> 00:23:17,440
Speaker 1: seeing in this period is kind of the backswing of deregulation.

462
00:23:17,680 --> 00:23:20,640
Speaker 1: Right Initially there's this huge drop in ticket prices, way

463
00:23:20,640 --> 00:23:23,439
Speaker 1: more people take to the sky, But the end of

464
00:23:23,480 --> 00:23:27,280
Speaker 1: the caab's anti competitive regime also leads to an inevitable

465
00:23:27,400 --> 00:23:30,560
Speaker 1: tightening of the industry. And kind of where that's ended

466
00:23:30,640 --> 00:23:33,439
Speaker 1: up today. You know, we talked about it. It's not

467
00:23:33,680 --> 00:23:35,960
Speaker 1: entirely negative. There's a lot of things that are positive

468
00:23:36,000 --> 00:23:38,439
Speaker 1: about the deregulation. But the other thing, the thing that

469
00:23:38,480 --> 00:23:41,360
Speaker 1: it's like, the way it all winds up, is that

470
00:23:41,400 --> 00:23:45,800
Speaker 1: today four carriers control eighty percent of the domestic airline market.

471
00:23:46,160 --> 00:23:50,000
Speaker 1: As former American Airlines chairman Robert Crandall told ABC, the

472
00:23:50,040 --> 00:23:53,680
Speaker 1: consequences of deregulation have been very adverse our airlines. Once

473
00:23:53,720 --> 00:23:57,399
Speaker 1: world leaders, are now laggards in every category, including fleet age,

474
00:23:57,440 --> 00:24:01,159
Speaker 1: service quality, and international reputation. Fewer and fewer flights are

475
00:24:01,200 --> 00:24:03,960
Speaker 1: on time, Airport congestion has become a staple of late

476
00:24:04,040 --> 00:24:06,800
Speaker 1: night comedy shows, and even higher percentage of bags are

477
00:24:06,840 --> 00:24:09,520
Speaker 1: lost or misplaced. Last minute seats are harder and harder

478
00:24:09,600 --> 00:24:13,480
Speaker 1: to find. Passenger complaints of skyrocketed airline service by any

479
00:24:13,480 --> 00:24:18,920
Speaker 1: standard had become unacceptable. Now Crandall is a business school too,

480
00:24:18,960 --> 00:24:23,240
Speaker 1: write and he's like he's kind of moaning the deregulation

481
00:24:23,359 --> 00:24:26,560
Speaker 1: in part because like he's a guy who had succeeded

482
00:24:26,600 --> 00:24:30,159
Speaker 1: at an earlier age of yeah, like pride and exactly. Yeah,

483
00:24:30,240 --> 00:24:32,560
Speaker 1: but it's one of those things, so like, I don't know,

484
00:24:33,880 --> 00:24:36,919
Speaker 1: there's a lot of downsides to deregulation. And at first

485
00:24:37,000 --> 00:24:39,359
Speaker 1: the you know, it doesn't matter to Lorenzo, but like

486
00:24:39,600 --> 00:24:41,720
Speaker 1: by the time kind of we're in the early eighties,

487
00:24:42,280 --> 00:24:45,120
Speaker 1: the industry is starting to contract, and he's just kind

488
00:24:45,119 --> 00:24:47,520
Speaker 1: of it looks initially he's not big enough to like

489
00:24:47,640 --> 00:24:50,200
Speaker 1: make shit work. He's getting eaten alive by all sides.

490
00:24:51,200 --> 00:24:52,800
Speaker 1: So the walls are kind of closing in on the

491
00:24:52,840 --> 00:24:55,359
Speaker 1: guy at this point, and he defaults to what was

492
00:24:55,440 --> 00:24:59,480
Speaker 1: basically his only real strategy, cutting perks for passengers and

493
00:24:59,520 --> 00:25:03,000
Speaker 1: squeezing his employees as hard as possible. Frank didn't just

494
00:25:03,040 --> 00:25:04,800
Speaker 1: see this as good business. There was a degree to

495
00:25:04,800 --> 00:25:07,280
Speaker 1: which this is like a thing he enjoys. It's like

496
00:25:07,440 --> 00:25:10,920
Speaker 1: a pleasure to him, fucking with his workforce. I found

497
00:25:10,960 --> 00:25:14,480
Speaker 1: a book series called Flying the Line by George Hopkins.

498
00:25:14,720 --> 00:25:17,280
Speaker 1: George is a former Navy pilot and an air travel

499
00:25:17,320 --> 00:25:20,879
Speaker 1: industry historian, and these he writ He's got like this

500
00:25:21,000 --> 00:25:23,159
Speaker 1: series of books called Flying the Lion, and if you like,

501
00:25:23,520 --> 00:25:26,440
Speaker 1: if you want a frustrating amount of detail about how

502
00:25:26,480 --> 00:25:29,680
Speaker 1: air travel used to work, George is your boy, right.

503
00:25:29,760 --> 00:25:31,640
Speaker 1: He will tell you way more than you ever wanted

504
00:25:31,680 --> 00:25:34,400
Speaker 1: to know about how fucking airlines worked in the seventies

505
00:25:34,440 --> 00:25:38,520
Speaker 1: and eighties. He portrays Lorenzo, and again he's got an

506
00:25:38,600 --> 00:25:41,520
Speaker 1: axe to grind against this guy. He portrays Lorenzo as

507
00:25:41,560 --> 00:25:46,080
Speaker 1: almost ghoulishly excited to fuck over stewardesses. In particular, quote

508
00:25:46,720 --> 00:25:48,919
Speaker 1: Phil Nash who went to work for Continental in nineteen

509
00:25:48,960 --> 00:25:51,399
Speaker 1: sixty six after serving in the US Air Force and

510
00:25:51,480 --> 00:25:54,960
Speaker 1: later became ALPA EVP in nineteen eighty to nineteen eighty two.

511
00:25:55,160 --> 00:25:58,280
Speaker 1: We'll never forget his first encounter with Frank Lorenzo. Above

512
00:25:58,280 --> 00:26:01,399
Speaker 1: all others, Lorenzo typified this new managerial breed. At a

513
00:26:01,400 --> 00:26:04,000
Speaker 1: special meeting in Denver, Nash asked Lorenzo, who was in

514
00:26:04,040 --> 00:26:06,800
Speaker 1: the process of taking over Continental left the time, why

515
00:26:06,840 --> 00:26:09,520
Speaker 1: he was so intent on reducing the pay of flight attendants.

516
00:26:09,840 --> 00:26:12,119
Speaker 1: Didn't he know phil Nash asked that many of them

517
00:26:12,119 --> 00:26:14,399
Speaker 1: were single parents who couldn't afford to own homes, that

518
00:26:14,480 --> 00:26:17,200
Speaker 1: the pay rate Z was proposing. Lorenzo looked at Nash

519
00:26:17,240 --> 00:26:19,680
Speaker 1: as if he were crazy. Quite frankly, I don't believe

520
00:26:19,680 --> 00:26:21,719
Speaker 1: flight attendants ought to make enough money so they can

521
00:26:21,800 --> 00:26:25,200
Speaker 1: own houses, Lorenzo told a flabbergasted Nash. Maybe they should

522
00:26:25,200 --> 00:26:26,800
Speaker 1: find another job that pays better.

523
00:26:27,640 --> 00:26:30,000
Speaker 2: Oh fuck wow.

524
00:26:30,080 --> 00:26:33,159
Speaker 3: He's always wearing his like sociopath badge on his sleeve,

525
00:26:33,440 --> 00:26:35,960
Speaker 3: like at every opportunity. He can't even He's like, yeah, yeah,

526
00:26:35,960 --> 00:26:37,400
Speaker 3: they don't, I mean, they don't deserve air.

527
00:26:37,520 --> 00:26:39,679
Speaker 2: Yeah, I don't even think they're really people. Yeah, fuck him.

528
00:26:39,680 --> 00:26:42,439
Speaker 2: Why don't we just shoot them? Yeah we did.

529
00:26:42,720 --> 00:26:44,119
Speaker 3: I mean, if it's up to me, we'd throw him

530
00:26:44,119 --> 00:26:45,960
Speaker 3: out the fucking plane before we land and get a

531
00:26:46,000 --> 00:26:47,920
Speaker 3: new crop before the next flight takes off.

532
00:26:48,160 --> 00:26:50,720
Speaker 1: And like, yeah, it's it's wild because like Nash is

533
00:26:50,800 --> 00:26:53,720
Speaker 1: obviously Nash is a capitalist. Nash is a guy who

534
00:26:53,880 --> 00:26:57,400
Speaker 1: believes in free enterprise. But also he does he comes

535
00:26:57,440 --> 00:26:59,280
Speaker 1: from this old era where he's like, well, but they

536
00:26:59,280 --> 00:27:01,240
Speaker 1: wouldn't be able to buy houses, and that's like the

537
00:27:01,280 --> 00:27:02,320
Speaker 1: whole point, right.

538
00:27:02,200 --> 00:27:04,160
Speaker 2: Like everyone to be able to buy a house. That's

539
00:27:04,160 --> 00:27:10,080
Speaker 2: why you toil. No, some people take these jobs and

540
00:27:10,160 --> 00:27:11,440
Speaker 2: fuck them if they take them.

541
00:27:11,640 --> 00:27:15,440
Speaker 1: Yeah, like they work, and then ideally they drop dead

542
00:27:15,440 --> 00:27:18,040
Speaker 1: at age forty nine when they stop being as profitable.

543
00:27:19,760 --> 00:27:23,639
Speaker 1: So Frank's prime target next is going to be pilots. Now,

544
00:27:23,880 --> 00:27:27,320
Speaker 1: for very obvious reasons. Pilots tend to make pretty good money, right,

545
00:27:27,760 --> 00:27:30,240
Speaker 1: and their costs are one of the more significant baked

546
00:27:30,320 --> 00:27:33,800
Speaker 1: in costs for airline management. And this is normally when

547
00:27:33,840 --> 00:27:37,240
Speaker 1: we talk about like the struggle of like unions against management,

548
00:27:37,680 --> 00:27:39,840
Speaker 1: we're talking about like, yeah, you got like a bunch

549
00:27:39,880 --> 00:27:42,719
Speaker 1: of coal miners, right, and maybe the industry changes around them,

550
00:27:42,840 --> 00:27:45,199
Speaker 1: or like the executives make a bad decision, but the

551
00:27:45,240 --> 00:27:47,680
Speaker 1: coal miners are like doing their job, they're getting the

552
00:27:47,680 --> 00:27:49,280
Speaker 1: coal out of the world, and they're just getting like

553
00:27:49,400 --> 00:27:52,920
Speaker 1: fucked over by the people who run the company. It's

554
00:27:52,960 --> 00:27:55,720
Speaker 1: a bit different with pilots unions because, for one thing,

555
00:27:55,880 --> 00:27:59,120
Speaker 1: up until recently, pilots had kind of run a lot

556
00:27:59,119 --> 00:28:02,120
Speaker 1: of the airlines. Right, So even if you know you're

557
00:28:02,200 --> 00:28:05,840
Speaker 1: just a flyer, you're not in management technically, you're the

558
00:28:05,880 --> 00:28:08,199
Speaker 1: guy who runs your company is probably a pilot, and

559
00:28:08,240 --> 00:28:10,119
Speaker 1: so are a lot of executives, and maybe you worked

560
00:28:10,119 --> 00:28:13,000
Speaker 1: with some of these guys. So like when other airline

561
00:28:13,119 --> 00:28:16,600
Speaker 1: unions get fucked over, the pilots are usually safe, you know,

562
00:28:16,640 --> 00:28:20,080
Speaker 1: because they're close with management right right, right right. And

563
00:28:20,160 --> 00:28:22,000
Speaker 1: it's like, you know, today we're dealing with this thing

564
00:28:22,040 --> 00:28:24,920
Speaker 1: where like there's a shortage of pilots in part because

565
00:28:24,920 --> 00:28:28,040
Speaker 1: there's this very unreasonably long period of time in the

566
00:28:28,119 --> 00:28:30,480
Speaker 1: US where you have to like be trained and have

567
00:28:30,560 --> 00:28:33,680
Speaker 1: experience to be able to be a commercial pilot that's

568
00:28:33,720 --> 00:28:36,439
Speaker 1: like much longer than like what the requirements are in Europe.

569
00:28:36,480 --> 00:28:38,720
Speaker 1: And it's a thing that like the pilot's unions have

570
00:28:38,760 --> 00:28:40,880
Speaker 1: fought for because they make more money that way. Not

571
00:28:40,920 --> 00:28:43,520
Speaker 1: blaming everything on the pilots, but it's not exactly the

572
00:28:43,560 --> 00:28:46,720
Speaker 1: same as like the stewardess's union, right, because they are

573
00:28:46,880 --> 00:28:52,200
Speaker 1: closer to running, closer to power, right, So pilots have

574
00:28:52,240 --> 00:28:55,320
Speaker 1: more baked in benefits. And they also, like a lot

575
00:28:55,320 --> 00:28:56,920
Speaker 1: of them, are like friends with the guys who are

576
00:28:56,960 --> 00:28:59,120
Speaker 1: running their companies. So one consequence of this is that

577
00:28:59,160 --> 00:29:02,280
Speaker 1: when management and the airlines had made cuts, the pilots

578
00:29:02,280 --> 00:29:07,320
Speaker 1: had generally been spared. Dennis Higgins, who worked for Texas International, explained, quote,

579
00:29:07,600 --> 00:29:10,080
Speaker 1: some people in senior management were extremely close to the

580
00:29:10,080 --> 00:29:12,280
Speaker 1: pilots and smooth that mess over. They spent time in

581
00:29:12,320 --> 00:29:15,520
Speaker 1: pilot's homes, went to kids graduations. It was very much

582
00:29:15,520 --> 00:29:20,400
Speaker 1: a family atmosphere. So Lorenzo obviously does not care about

583
00:29:20,400 --> 00:29:22,440
Speaker 1: the pilots. He wants to fuck them over, but he

584
00:29:22,520 --> 00:29:25,880
Speaker 1: understands there's an opportunity here, right because the pilot's unions

585
00:29:25,880 --> 00:29:29,360
Speaker 1: are already kind of acclimated to the idea that like, well,

586
00:29:29,360 --> 00:29:32,040
Speaker 1: maybe we can fuck over some of like our coworkers

587
00:29:32,080 --> 00:29:36,280
Speaker 1: and other unions as and will still be okay. And Lorenzo,

588
00:29:36,680 --> 00:29:38,960
Speaker 1: he's kind of like the British Empire. Right, He's like,

589
00:29:39,080 --> 00:29:41,120
Speaker 1: I feel like this is an opportunity I can play

590
00:29:41,160 --> 00:29:44,800
Speaker 1: these unions off against each other in order to benefit myself.

591
00:29:45,400 --> 00:29:48,760
Speaker 1: Hopkins writes. Quote Lorenzo, for all his faults, made no

592
00:29:48,920 --> 00:29:51,880
Speaker 1: secret of his plans, but he deviously led various employee

593
00:29:51,880 --> 00:29:54,200
Speaker 1: groups to believe that he was after concessions only from

594
00:29:54,280 --> 00:29:57,440
Speaker 1: other unions. At the time of his takeover, Lorenzo hosted

595
00:29:57,480 --> 00:30:01,680
Speaker 1: a cocktail reception for txi's pilots the Houston Intercontinental Hotel.

596
00:30:02,000 --> 00:30:05,240
Speaker 1: Lorenzo flatly declared that except for pilots, he intended to

597
00:30:05,240 --> 00:30:07,600
Speaker 1: take the airline back to the employment levels of nineteen

598
00:30:07,680 --> 00:30:10,640
Speaker 1: sixty seven. There are profits to be made here. Dennis

599
00:30:10,720 --> 00:30:13,760
Speaker 1: Higgins recalls the Lorenzo saying, We're going to continue operating

600
00:30:13,800 --> 00:30:15,280
Speaker 1: the same number of trips, but we are going to

601
00:30:15,280 --> 00:30:21,480
Speaker 1: get rid of some ground for folks. So because txis ground,

602
00:30:21,480 --> 00:30:25,160
Speaker 1: folks are unionized, this strategy means that the airline is

603
00:30:25,240 --> 00:30:28,080
Speaker 1: going to like, there's going to be some labor fighting

604
00:30:28,160 --> 00:30:31,640
Speaker 1: over this, right, and Lorenzo is eager to fuck with

605
00:30:31,680 --> 00:30:35,040
Speaker 1: the union. So he his proposition is like, I'm going

606
00:30:35,120 --> 00:30:37,680
Speaker 1: to turn all of our baggage handlers and ticket agents

607
00:30:37,720 --> 00:30:40,160
Speaker 1: into temporary employees, right, I'm just going to replace the

608
00:30:40,240 --> 00:30:43,640
Speaker 1: unionized guys with temps, which is like a standard tactic

609
00:30:43,680 --> 00:30:45,760
Speaker 1: today and that's starting to be more common in this

610
00:30:45,800 --> 00:30:48,800
Speaker 1: period of time. He also argues that, like, well, we've

611
00:30:48,800 --> 00:30:51,360
Speaker 1: got all these flights to cities that are like outlying,

612
00:30:51,400 --> 00:30:52,840
Speaker 1: and so we've they're only on like one or two

613
00:30:52,880 --> 00:30:55,040
Speaker 1: flights coming in a day there, so they don't need

614
00:30:55,080 --> 00:30:57,640
Speaker 1: any full time employees. So like for these smaller routes,

615
00:30:57,800 --> 00:31:00,160
Speaker 1: we'll just hire like college students who need like like

616
00:31:00,200 --> 00:31:03,720
Speaker 1: shitty part time gigs to be ground employees just when

617
00:31:03,800 --> 00:31:07,560
Speaker 1: like the flight is departing and arriving. And it's one

618
00:31:07,560 --> 00:31:10,000
Speaker 1: of those things. Part of how he's able to get

619
00:31:10,000 --> 00:31:12,760
Speaker 1: by with this initially is he tells the pilot's union, Hey, guys,

620
00:31:12,920 --> 00:31:15,320
Speaker 1: I want you to keep making money, but like, we

621
00:31:15,400 --> 00:31:18,520
Speaker 1: can't keep paying you all this money if these worthless

622
00:31:18,560 --> 00:31:21,120
Speaker 1: ground employees are siphoning all your money away.

623
00:31:21,200 --> 00:31:26,000
Speaker 2: So what do you say? Yeah, so what do you say? Now?

624
00:31:26,320 --> 00:31:28,240
Speaker 1: All of the pilots don't buy this. There are some

625
00:31:28,360 --> 00:31:31,440
Speaker 1: pilots at this big intercontinental hotel meeting that are like, well,

626
00:31:31,480 --> 00:31:33,920
Speaker 1: what if we try to offer better flights and try

627
00:31:33,960 --> 00:31:37,760
Speaker 1: to make more money that way. And Lorenzo, he has

628
00:31:37,760 --> 00:31:42,320
Speaker 1: a violent reaction to this idea. He Dennis Higgins recalls quote,

629
00:31:42,440 --> 00:31:46,080
Speaker 1: Lorenzo was openly against the better product concept. He said,

630
00:31:46,160 --> 00:31:48,480
Speaker 1: the traveling public looks for the dollar sign. What they're

631
00:31:48,520 --> 00:31:50,520
Speaker 1: interested in is a cheap seat. The ones who don't

632
00:31:50,560 --> 00:31:53,200
Speaker 1: like our service can go pay higher prices on another carrier.

633
00:31:53,400 --> 00:31:56,400
Speaker 1: He was very cynical about the public. And this is

634
00:31:56,480 --> 00:31:58,480
Speaker 1: like you can see, this is how all of air

635
00:31:58,520 --> 00:32:01,280
Speaker 1: travel works now, right, is like, fuck them. All they

636
00:32:01,280 --> 00:32:03,200
Speaker 1: want is to see a cheap price, and you know what,

637
00:32:03,600 --> 00:32:05,160
Speaker 1: we can make him pay more in the long run.

638
00:32:05,200 --> 00:32:07,040
Speaker 1: If we're Spirit Air, you know, we'll sneak in a

639
00:32:07,040 --> 00:32:10,040
Speaker 1: couple one hundred dollars charges that they're not seeing. But

640
00:32:10,200 --> 00:32:12,680
Speaker 1: all these idiots care about is that they see, you know,

641
00:32:13,120 --> 00:32:14,440
Speaker 1: what looks like a good price.

642
00:32:14,480 --> 00:32:14,960
Speaker 2: Initially.

643
00:32:15,000 --> 00:32:16,360
Speaker 1: We can get him to do all sorts of dumb

644
00:32:16,400 --> 00:32:20,560
Speaker 1: shit if we trick him. That's Lorenzo's attitude. He's kind

645
00:32:20,600 --> 00:32:22,840
Speaker 1: of like one of the first guys in air travel

646
00:32:23,040 --> 00:32:25,600
Speaker 1: who sees where things are going to go here, and

647
00:32:25,640 --> 00:32:29,040
Speaker 1: he is right, like people mostly care about it being cheap.

648
00:32:29,040 --> 00:32:30,920
Speaker 1: It turns out, We're willing to suffer with a lot

649
00:32:30,960 --> 00:32:32,760
Speaker 1: on planes as long as we don't have to pay

650
00:32:32,760 --> 00:32:36,440
Speaker 1: too much. Yeah seriously, Yeah, which, you know whatever, that's life.

651
00:32:36,800 --> 00:32:39,640
Speaker 1: So while he's doing all this getting each union to

652
00:32:39,680 --> 00:32:41,640
Speaker 1: agree to a few cuts under the promise that they'll

653
00:32:41,680 --> 00:32:44,440
Speaker 1: be spared and someone else will get fired, he starts

654
00:32:44,480 --> 00:32:47,920
Speaker 1: selling Continental aircraft as fast as he can. This puts

655
00:32:47,960 --> 00:32:50,560
Speaker 1: like twenty one million dollars in the bank right away,

656
00:32:50,600 --> 00:32:52,800
Speaker 1: and he gets another big, like thirty million dollar loan

657
00:32:52,840 --> 00:32:56,160
Speaker 1: from Chase Manhattan. He does this public stock offering to

658
00:32:56,280 --> 00:32:58,480
Speaker 1: raise more money, and over the course of eighty three

659
00:32:58,560 --> 00:33:02,080
Speaker 1: he builds up this big war chest, right so suddenly

660
00:33:02,120 --> 00:33:04,600
Speaker 1: Continental has like a weird amount of cash on hand,

661
00:33:04,680 --> 00:33:07,600
Speaker 1: even though they lose like eighty something million dollars that year.

662
00:33:08,120 --> 00:33:10,920
Speaker 1: And everyone assumes he's doing this he's saving up money

663
00:33:10,960 --> 00:33:13,480
Speaker 1: because he's gonna buy another fucking airline, because that's what

664
00:33:13,560 --> 00:33:17,840
Speaker 1: Frank always does. But he actually has a different, cunning,

665
00:33:18,240 --> 00:33:21,400
Speaker 1: more fucked up plan. He's going to break the unions

666
00:33:21,440 --> 00:33:23,320
Speaker 1: once and for all, and he's going to do it

667
00:33:23,800 --> 00:33:30,400
Speaker 1: by declaring bankruptcy. Yeah, yeah, he is.

668
00:33:30,840 --> 00:33:33,040
Speaker 3: Every hes like I love that, every like all of

669
00:33:33,080 --> 00:33:36,320
Speaker 3: his goals are just in line with making things just

670
00:33:36,600 --> 00:33:37,920
Speaker 3: as fucked up for other.

671
00:33:37,720 --> 00:33:39,680
Speaker 2: People as possible, just enriching himself.

672
00:33:40,040 --> 00:33:42,080
Speaker 1: Yeah, I mean, of course, like that's the way it all,

673
00:33:42,160 --> 00:33:43,200
Speaker 1: that's the way it all works.

674
00:33:43,200 --> 00:33:43,920
Speaker 2: But he's doing it.

675
00:33:44,160 --> 00:33:45,880
Speaker 1: This is like, this is one of the first times

676
00:33:45,880 --> 00:33:49,600
Speaker 1: that he's really he's he's creating something. No one had

677
00:33:49,640 --> 00:33:52,760
Speaker 1: ever done this before. So basically his plan is, Hey,

678
00:33:53,320 --> 00:33:56,320
Speaker 1: if you go into bankruptcy, I think you might be

679
00:33:56,320 --> 00:33:59,360
Speaker 1: able to throw out all your union contracts, right because and.

680
00:33:59,320 --> 00:34:02,160
Speaker 2: The part of and shit, yeah.

681
00:34:01,400 --> 00:34:03,280
Speaker 1: And no one, no one knew if it would work

682
00:34:03,320 --> 00:34:05,760
Speaker 1: this way, right, Like this had not been done before.

683
00:34:06,080 --> 00:34:08,120
Speaker 1: But basically his plan is like, I'll take this shit

684
00:34:08,160 --> 00:34:09,080
Speaker 1: to the Supreme Court if.

685
00:34:09,000 --> 00:34:09,360
Speaker 2: I have to.

686
00:34:09,480 --> 00:34:11,400
Speaker 1: I think eventually they'll rule with me, because you know,

687
00:34:11,480 --> 00:34:13,399
Speaker 1: Reagan's in the fucking White House, right, I can see

688
00:34:13,400 --> 00:34:14,720
Speaker 1: where the fucking winds are blowing.

689
00:34:15,080 --> 00:34:16,000
Speaker 2: Yeah.

690
00:34:16,120 --> 00:34:18,640
Speaker 3: It's like though, like, right, brothers of fucking the unions

691
00:34:18,640 --> 00:34:19,879
Speaker 3: over like, I don't know if you can.

692
00:34:19,960 --> 00:34:22,239
Speaker 2: He's like, I don't drive, We're gonna dry man, We're

693
00:34:22,280 --> 00:34:24,000
Speaker 2: kind of figure it out. Yeah, and if we do,

694
00:34:24,160 --> 00:34:27,960
Speaker 2: and if it works, welcome to a new age. Yeah.

695
00:34:28,000 --> 00:34:30,960
Speaker 1: That is exactly what he's saying, and so he would

696
00:34:31,040 --> 00:34:33,920
Speaker 1: claim like he dis disappearance at Harvard the next year

697
00:34:33,960 --> 00:34:36,200
Speaker 1: and he's like, well, you know, I really failed and

698
00:34:36,200 --> 00:34:38,239
Speaker 1: we had to do chapter eleven because like I just

699
00:34:38,320 --> 00:34:39,319
Speaker 1: couldn't make shit work.

700
00:34:39,360 --> 00:34:40,239
Speaker 2: You know, this is on me.

701
00:34:40,760 --> 00:34:43,000
Speaker 1: But we have like notes that he was sending around

702
00:34:43,040 --> 00:34:45,279
Speaker 1: the company at the time where he's like, you know,

703
00:34:46,040 --> 00:34:48,840
Speaker 1: this is what's gonna work, Like the creditors are ready

704
00:34:48,880 --> 00:34:51,120
Speaker 1: for it, Like we're gonna fucking kill the unions with

705
00:34:51,200 --> 00:34:53,239
Speaker 1: this shit, Like that's the reason that we're doing this.

706
00:34:53,360 --> 00:34:55,840
Speaker 1: And at the same time, he starts to execute this

707
00:34:56,000 --> 00:34:59,560
Speaker 1: very slick media strategy where he's he's really playing up

708
00:34:59,600 --> 00:35:02,239
Speaker 1: the company these financial problems and he's blaming it all

709
00:35:02,280 --> 00:35:05,520
Speaker 1: on workers' salaries, right, like I failed. What I failed

710
00:35:05,560 --> 00:35:07,879
Speaker 1: in doing is I just couldn't get salaries low enough.

711
00:35:07,920 --> 00:35:10,200
Speaker 1: You know, we're paying too much on workers and that's

712
00:35:10,200 --> 00:35:13,120
Speaker 1: why it's impossible to make a profit with this airline,

713
00:35:13,520 --> 00:35:15,680
Speaker 1: he claimed in his speech at Harvard. Quote, what we

714
00:35:15,760 --> 00:35:17,759
Speaker 1: tried to do was shift the story from it being

715
00:35:17,760 --> 00:35:20,880
Speaker 1: a bankruptcy to a labor problem as fast as possible.

716
00:35:21,480 --> 00:35:25,399
Speaker 1: And this works really well, right, so's he's Basically, as

717
00:35:25,440 --> 00:35:27,279
Speaker 1: this is going on, as he's prepping to go into

718
00:35:27,360 --> 00:35:31,120
Speaker 1: chapter eleven, he's renegotiating his contracts with these unions, and

719
00:35:31,320 --> 00:35:33,759
Speaker 1: instead of working anything out with him, he just keeps

720
00:35:33,760 --> 00:35:36,520
Speaker 1: at the last moment when they'll think they're about ready

721
00:35:36,560 --> 00:35:38,920
Speaker 1: to sign a contract, they'd be like, ah, nope, you

722
00:35:39,000 --> 00:35:41,560
Speaker 1: know what, I actually I can't do this or I

723
00:35:41,560 --> 00:35:43,200
Speaker 1: can't do that. We have to go back to the

724
00:35:43,280 --> 00:35:46,600
Speaker 1: drawing board. So the unions eventually decide to go on strike,

725
00:35:46,680 --> 00:35:50,160
Speaker 1: and as soon as they go on strike, he furloughs

726
00:35:50,200 --> 00:35:53,280
Speaker 1: all of the non striking employees or the striking employees,

727
00:35:53,320 --> 00:35:58,399
Speaker 1: he brings in scabs and he declares chapter eleven right,

728
00:35:58,800 --> 00:36:01,600
Speaker 1: So he goes into bankruptcy, and he says, well, now

729
00:36:01,600 --> 00:36:04,359
Speaker 1: that I'm doing bankruptcy, I want the government to let

730
00:36:04,400 --> 00:36:09,799
Speaker 1: me revoke all of my union contracts. So yeah, that's

731
00:36:10,000 --> 00:36:12,200
Speaker 1: that's the plot. That's what he's trying to do here.

732
00:36:12,480 --> 00:36:15,440
Speaker 1: And this right up from Texas Monthly describes what happens next.

733
00:36:16,000 --> 00:36:18,719
Speaker 1: The airline immediately shut down operations and laid off all

734
00:36:18,719 --> 00:36:22,440
Speaker 1: but four thousand of its twelve thousand employees. Continental executives

735
00:36:22,480 --> 00:36:24,600
Speaker 1: said the line would resume flights three days later to

736
00:36:24,680 --> 00:36:27,120
Speaker 1: selected cities at the low price of forty nine dollars

737
00:36:27,160 --> 00:36:30,920
Speaker 1: one way. Returning workers would face pay cuts, increased productivity requirements,

738
00:36:30,960 --> 00:36:33,759
Speaker 1: and the elimination of all pensions. The salary of flight

739
00:36:33,800 --> 00:36:36,560
Speaker 1: attendants would drop from twenty nine thousand to fifteen thousand.

740
00:36:36,719 --> 00:36:39,640
Speaker 1: Pilots making eighty nine thousand would be paid forty three thousand,

741
00:36:39,800 --> 00:36:42,120
Speaker 1: the same salary Lorenzo said he would take in place

742
00:36:42,160 --> 00:36:44,840
Speaker 1: of his normal two hundred and fifty seven thousand dollars.

743
00:36:45,280 --> 00:36:48,800
Speaker 1: At press conferences, he glossed over Continental's fifty million dollars

744
00:36:48,840 --> 00:36:51,399
Speaker 1: in cash reserves. The airline faced running out of money

745
00:36:51,400 --> 00:36:54,440
Speaker 1: in a few days, he insisted. Meanwhile, union leaders and

746
00:36:54,480 --> 00:36:57,960
Speaker 1: even some business executives denounced him. Wall Street analysts questioned

747
00:36:58,000 --> 00:37:03,480
Speaker 1: the company's future, and competitors rejoice. So Frank's plan here,

748
00:37:03,520 --> 00:37:05,960
Speaker 1: there's like an element of desperation to this, because no

749
00:37:06,000 --> 00:37:08,560
Speaker 1: one's ever done this before. He's just pretty sure it's

750
00:37:08,600 --> 00:37:12,719
Speaker 1: going to work. On September twenty seventh, when he reopens

751
00:37:12,760 --> 00:37:16,000
Speaker 1: the airline and starts offering these cut rate flares, basically

752
00:37:16,040 --> 00:37:18,640
Speaker 1: the whole Continental fleet remains on the ground. There were

753
00:37:18,640 --> 00:37:20,760
Speaker 1: only a handful of flights he was able to actually

754
00:37:20,800 --> 00:37:24,440
Speaker 1: pull out, but since the airline had technically resumed operations,

755
00:37:24,440 --> 00:37:26,800
Speaker 1: he was able to ask the bankruptcy court to rescind

756
00:37:26,840 --> 00:37:30,680
Speaker 1: the union contracts. Gradually, Continental starts opening up more and

757
00:37:30,719 --> 00:37:33,080
Speaker 1: more flights, bringing in scabs to do all the work,

758
00:37:33,680 --> 00:37:36,440
Speaker 1: but the real financial health of the company is unclear.

759
00:37:36,719 --> 00:37:39,360
Speaker 1: He declares at a press conference that like, we're doing great.

760
00:37:39,440 --> 00:37:41,719
Speaker 1: The same day he asks the government to release ten

761
00:37:41,719 --> 00:37:44,480
Speaker 1: million in their funds to keep the airline from collapsing.

762
00:37:45,160 --> 00:37:47,760
Speaker 1: The unions fight back, They go on strike. They refuse

763
00:37:47,800 --> 00:37:50,160
Speaker 1: to go back to work for reduced pay, but they

764
00:37:50,200 --> 00:37:53,120
Speaker 1: can't stop the scabs from a flooding in, and Frank

765
00:37:53,239 --> 00:37:55,200
Speaker 1: is able to bring in enough workers to keep this

766
00:37:55,360 --> 00:37:59,040
Speaker 1: minimal schedule operational. Now, the union with the most clout

767
00:37:59,080 --> 00:38:01,480
Speaker 1: and thus the most power or are the pilots. And

768
00:38:01,560 --> 00:38:04,080
Speaker 1: because pilots made bank they had enough money that they

769
00:38:04,080 --> 00:38:06,880
Speaker 1: were able to like draw funding from other pilots unions

770
00:38:06,920 --> 00:38:09,600
Speaker 1: to fund their part of the strike. So they start

771
00:38:09,800 --> 00:38:11,600
Speaker 1: using some of this money to carry out a media

772
00:38:11,680 --> 00:38:14,000
Speaker 1: campaign where they're basically trying to be like, all this

773
00:38:14,120 --> 00:38:16,759
Speaker 1: non union labor has made flying more dangerous. You might

774
00:38:16,800 --> 00:38:18,880
Speaker 1: die in the air because of what, you know, what

775
00:38:19,000 --> 00:38:22,680
Speaker 1: Lorenzo's doing. This may have been true because Continental gets

776
00:38:22,680 --> 00:38:25,680
Speaker 1: fined like four hundred grand because the FAA sees that

777
00:38:25,719 --> 00:38:29,080
Speaker 1: they're not like they're breaking a bunch of rules basically.

778
00:38:29,480 --> 00:38:32,160
Speaker 1: But no planes crash from Continental in this period, so

779
00:38:32,200 --> 00:38:34,839
Speaker 1: it's kind of hard to like, you know, yeah, really

780
00:38:34,920 --> 00:38:37,080
Speaker 1: point the finger would have helped them if some people

781
00:38:37,120 --> 00:38:38,239
Speaker 1: had died, is what I'd say.

782
00:38:38,480 --> 00:38:39,400
Speaker 3: Yeah.

783
00:38:39,719 --> 00:38:42,040
Speaker 1: Now, one of the things that's really interesting is like

784
00:38:42,120 --> 00:38:45,760
Speaker 1: how ugly this strike gets. So on November twenty second,

785
00:38:45,800 --> 00:38:49,200
Speaker 1: two Continental pilots get arrested trying to evade a police

786
00:38:49,239 --> 00:38:52,960
Speaker 1: license checkpoint. Both of these guys are I think this

787
00:38:53,080 --> 00:38:55,399
Speaker 1: is like a DUI checkpoint basically, but both of these

788
00:38:55,440 --> 00:38:58,200
Speaker 1: pilots had been they'd been driving to the homes of

789
00:38:58,400 --> 00:39:01,680
Speaker 1: Continental scat pilots who were gabbing and throwing pipe bombs

790
00:39:01,680 --> 00:39:05,520
Speaker 1: at their houses. Oh shit, they get caught fucking pipe

791
00:39:05,520 --> 00:39:06,719
Speaker 1: bombs and scaps.

792
00:39:07,160 --> 00:39:07,560
Speaker 3: Oh no.

793
00:39:08,360 --> 00:39:11,279
Speaker 1: And it's like there's this like little war that goes

794
00:39:11,280 --> 00:39:13,440
Speaker 1: on because the year after these guys get convicted, a

795
00:39:13,520 --> 00:39:17,840
Speaker 1: Houston police attendant lieutenant gets charged and convicted of selling

796
00:39:17,880 --> 00:39:22,320
Speaker 1: confidential information about striking Continental employees to a private detective

797
00:39:22,360 --> 00:39:26,280
Speaker 1: hired by the airline, So like, yeah, the fucking nasty strike.

798
00:39:26,719 --> 00:39:30,520
Speaker 1: Yeah yeah. Soon after all this goes down, a court

799
00:39:30,560 --> 00:39:33,120
Speaker 1: case is ignited by Frank's Chapter eleven move and it

800
00:39:33,160 --> 00:39:36,160
Speaker 1: gets a ruling from the Supreme Court. They declare that

801
00:39:36,200 --> 00:39:39,320
Speaker 1: companies in chapter eleven have the right to cancel burdensome

802
00:39:39,360 --> 00:39:43,560
Speaker 1: union contracts. Now, Congress like seals this up. They passed

803
00:39:43,640 --> 00:39:47,000
Speaker 1: legislation so that like CEOs can't do what Frank did.

804
00:39:47,320 --> 00:39:50,000
Speaker 1: But he wins, right, he gets to actually like do

805
00:39:50,120 --> 00:39:50,480
Speaker 1: this shit.

806
00:39:50,640 --> 00:39:51,239
Speaker 2: Oh he got up.

807
00:39:51,480 --> 00:39:53,120
Speaker 3: So he's like, is he the only one they got

808
00:39:53,120 --> 00:39:53,719
Speaker 3: it over the line?

809
00:39:53,719 --> 00:39:55,840
Speaker 2: Basically that got.

810
00:39:55,640 --> 00:39:57,480
Speaker 1: It over the line in this way, right, Like there's

811
00:39:57,520 --> 00:39:59,920
Speaker 1: still kind of more openings to do this, but Congress

812
00:40:00,040 --> 00:40:03,240
Speaker 1: kind of makes it harder. But it works out for Frank.

813
00:40:03,719 --> 00:40:06,839
Speaker 1: His company is still in pretty desperate financial straits though,

814
00:40:07,120 --> 00:40:09,640
Speaker 1: and because he's the guy who had like led it there,

815
00:40:09,920 --> 00:40:13,000
Speaker 1: you might have expected him to have suffered financially. And

816
00:40:13,040 --> 00:40:14,640
Speaker 1: he's like making a big claim to like, well, I've

817
00:40:14,640 --> 00:40:17,520
Speaker 1: cut my salary, I'm making like way less money. You know,

818
00:40:17,560 --> 00:40:22,440
Speaker 1: we're all hurting here. This is a lie. Yeah, So

819
00:40:22,560 --> 00:40:24,880
Speaker 1: basically he's like I'm going to drop my salary from

820
00:40:24,920 --> 00:40:27,080
Speaker 1: like two hundred and sixty thousand to forty three grand.

821
00:40:28,120 --> 00:40:31,040
Speaker 1: But he he's that's not like the whole story, because

822
00:40:31,120 --> 00:40:34,440
Speaker 1: like he's getting bonuses. Obviously, he's like making hundreds of

823
00:40:34,480 --> 00:40:38,040
Speaker 1: thousands of dollars in bonuses, but he's also he's set

824
00:40:38,120 --> 00:40:41,720
Speaker 1: shit up so that like there's this weird he's basically

825
00:40:42,040 --> 00:40:46,080
Speaker 1: putting his money into this weird stock transaction that he's

826
00:40:46,120 --> 00:40:49,560
Speaker 1: like running through an automated subsidiary, which is like doing

827
00:40:49,600 --> 00:40:53,439
Speaker 1: the he's basically like doing like an automated stock trick

828
00:40:53,800 --> 00:40:57,200
Speaker 1: where he's like buying shares and then like reselling them

829
00:40:57,239 --> 00:41:00,879
Speaker 1: once they get Anyway, the way this all works out

830
00:41:00,960 --> 00:41:03,200
Speaker 1: is that he's able to buy two hundred thousand shares

831
00:41:03,400 --> 00:41:06,560
Speaker 1: of his company stock at fifty cents a share for

832
00:41:06,640 --> 00:41:08,719
Speaker 1: one hundred thousand dollars, but he only has to pay

833
00:41:08,760 --> 00:41:12,080
Speaker 1: five thousand dollars because he has Texas Air loan him

834
00:41:12,080 --> 00:41:15,279
Speaker 1: the rest of the money, and then he resells it

835
00:41:15,360 --> 00:41:18,319
Speaker 1: two years later when it's worth more money and effectively

836
00:41:18,360 --> 00:41:21,000
Speaker 1: makes like an extra one and a half million dollars

837
00:41:21,000 --> 00:41:23,480
Speaker 1: for paying five grand, where he basically like has the

838
00:41:23,520 --> 00:41:28,399
Speaker 1: company subsidize his investments. So yeah, it's he's making He's

839
00:41:28,440 --> 00:41:30,040
Speaker 1: doing just fine, right.

840
00:41:31,640 --> 00:41:33,399
Speaker 2: Yes, so, but I mean he's only making forty grand

841
00:41:33,440 --> 00:41:34,000
Speaker 2: a year now.

842
00:41:33,960 --> 00:41:35,799
Speaker 1: Are yeah only making for He's like one of the

843
00:41:35,840 --> 00:41:38,080
Speaker 1: first CEOs to be like, oh if I just tell

844
00:41:38,120 --> 00:41:41,319
Speaker 1: people my salaries cut Like these idiots don't understand all

845
00:41:41,360 --> 00:41:43,080
Speaker 1: the ways we can fuck with stock prices.

846
00:41:43,120 --> 00:41:43,440
Speaker 2: I don't know.

847
00:41:43,480 --> 00:41:46,799
Speaker 3: That's like a minuscule. That's not let's I don't even

848
00:41:46,800 --> 00:41:49,960
Speaker 3: need a salary. It's all the fucking bonuses and the stocks.

849
00:41:50,040 --> 00:41:52,680
Speaker 1: That's not where the fucking money is. But you know

850
00:41:52,719 --> 00:41:56,920
Speaker 1: where the money really is. Miles tell me podcast ads.

851
00:41:57,360 --> 00:41:59,919
Speaker 1: Oh yeah, yeah, like these podcast ads.

852
00:42:06,280 --> 00:42:07,760
Speaker 2: Ugh, we're back.

853
00:42:08,760 --> 00:42:12,200
Speaker 1: So yeah, it's really interesting. There's like during this kind

854
00:42:12,200 --> 00:42:15,600
Speaker 1: of period of time, Frank is also really willing to

855
00:42:15,640 --> 00:42:18,640
Speaker 1: fuck over his other like the corporate ghouls who like

856
00:42:18,719 --> 00:42:21,800
Speaker 1: make these moves possible. One of the guys who basically

857
00:42:21,840 --> 00:42:24,759
Speaker 1: funds his Chapter eleven scheme is the chairman of a

858
00:42:24,800 --> 00:42:28,240
Speaker 1: company called American General Harold Hook, and he floats Frank

859
00:42:28,280 --> 00:42:31,400
Speaker 1: the money to keep Continental going while he's like fighting

860
00:42:31,440 --> 00:42:34,799
Speaker 1: with the unions, and the understanding is that like they

861
00:42:35,160 --> 00:42:37,640
Speaker 1: will be partners in the airline business. Once it gets

862
00:42:37,719 --> 00:42:41,240
Speaker 1: back on the black, but Lorenzo doesn't sign anything with Hook,

863
00:42:41,480 --> 00:42:44,040
Speaker 1: like it's a handshake deal. And so as soon as

864
00:42:44,080 --> 00:42:47,239
Speaker 1: the airline's making money again, Hook is like, well, yeah,

865
00:42:47,280 --> 00:42:49,320
Speaker 1: now we're running this together. And Lorenzo's like, what do

866
00:42:49,360 --> 00:42:52,279
Speaker 1: you mean what do you mean you thought you know, you.

867
00:42:52,320 --> 00:42:53,960
Speaker 2: Thought a handshake deal meant anything?

868
00:42:54,160 --> 00:42:56,920
Speaker 3: Nah? Bro, No, that wasn't even that wasn't even to

869
00:42:56,960 --> 00:42:58,759
Speaker 3: like seal the deal. I was like, I see you

870
00:42:58,840 --> 00:43:01,080
Speaker 3: later put her there and then yeah, laugh had nothing

871
00:43:01,120 --> 00:43:02,960
Speaker 3: to do. No, dude, it's not even legal.

872
00:43:03,239 --> 00:43:05,279
Speaker 1: And it's because Hook has a lot of money. They

873
00:43:05,280 --> 00:43:07,759
Speaker 1: go to court over this, and like a lot of

874
00:43:07,800 --> 00:43:10,319
Speaker 1: the case winds up being around how he had used

875
00:43:10,320 --> 00:43:14,080
Speaker 1: the word partner in these conversations, and his argument is like,

876
00:43:15,200 --> 00:43:17,520
Speaker 1: when I said partner, that was like a colloquial term.

877
00:43:17,560 --> 00:43:21,960
Speaker 1: It's like, buddy, yeah, yeah, exactly, how do you partner?

878
00:43:22,000 --> 00:43:23,759
Speaker 2: We're a Texas partner, you know.

879
00:43:23,880 --> 00:43:28,040
Speaker 3: Yeah. I feel like this we can go into business partner. Yeah,

880
00:43:28,040 --> 00:43:30,040
Speaker 3: that's kind of what he does. He could be my

881
00:43:30,120 --> 00:43:32,279
Speaker 3: business partner. Wait, so I could be your business or

882
00:43:32,280 --> 00:43:33,080
Speaker 3: your business partner.

883
00:43:34,480 --> 00:43:37,240
Speaker 1: So after he breaks the pilots union and he wins

884
00:43:37,280 --> 00:43:40,320
Speaker 1: this fight, scandals start to erupt. That makes it clear

885
00:43:40,360 --> 00:43:42,240
Speaker 1: how he had like done a lot of the business.

886
00:43:42,280 --> 00:43:43,799
Speaker 1: So one of the things that he does in order

887
00:43:43,840 --> 00:43:47,120
Speaker 1: to get investments is he like makes these deals overseas

888
00:43:47,280 --> 00:43:49,719
Speaker 1: while the problems are happening with like in like Australia

889
00:43:49,800 --> 00:43:52,200
Speaker 1: to like run a bunch of you know, get get

890
00:43:52,200 --> 00:43:55,319
Speaker 1: a bunch of roots for Continental. And it comes out

891
00:43:55,360 --> 00:43:58,280
Speaker 1: after the fact that like he had basically bribed the governor,

892
00:43:58,440 --> 00:44:02,160
Speaker 1: the ceremonial governor of which is a thing that exists

893
00:44:02,440 --> 00:44:04,840
Speaker 1: with free flights, in order to help him negotiate to

894
00:44:04,880 --> 00:44:07,040
Speaker 1: get these roots. And then it came out with the

895
00:44:07,280 --> 00:44:10,359
Speaker 1: judge the US the federal judge who'd ruled on their

896
00:44:10,440 --> 00:44:14,000
Speaker 1: Chapter eleven case before it hit the Supreme Court. Right after,

897
00:44:14,440 --> 00:44:17,799
Speaker 1: like the case goes Lorenzo's way, he quits being a

898
00:44:17,880 --> 00:44:19,880
Speaker 1: judge and gets a job at the law firm that

899
00:44:19,960 --> 00:44:24,040
Speaker 1: represented Lorenzo's companies. So like, yeah, this is all fine.

900
00:44:24,480 --> 00:44:28,239
Speaker 3: Oh yeah, I mean yeah, I mean he's he's got

901
00:44:28,239 --> 00:44:29,040
Speaker 3: all the right moves.

902
00:44:29,360 --> 00:44:32,920
Speaker 1: Yeah, yeah, he's he's it's going well for a while,

903
00:44:33,160 --> 00:44:37,319
Speaker 1: but more acquisitions followed, Like Frank kind of goes a

904
00:44:37,320 --> 00:44:40,560
Speaker 1: little nuts after he wins this continental case, and like,

905
00:44:41,200 --> 00:44:44,040
Speaker 1: you know, as as profits start to return, he starts

906
00:44:44,040 --> 00:44:46,480
Speaker 1: getting more investments. There's a lot of you know, people

907
00:44:46,520 --> 00:44:48,600
Speaker 1: are have a lot of confidence in him because he's

908
00:44:48,640 --> 00:44:51,960
Speaker 1: this like union buster. So he's able to like basically

909
00:44:52,120 --> 00:44:56,160
Speaker 1: work his way into taking over Eastern Airlines next, which

910
00:44:56,200 --> 00:45:00,400
Speaker 1: is the number three airline in the country. So he

911
00:45:00,600 --> 00:45:03,640
Speaker 1: is like, I send them like twenty percent or whatever,

912
00:45:03,680 --> 00:45:06,279
Speaker 1: like one, yeah, one fifth of all air traffic in

913
00:45:06,320 --> 00:45:09,600
Speaker 1: the United States is under Frank's personal control at this point.

914
00:45:10,000 --> 00:45:14,360
Speaker 1: But also Eastern is like bleeding money, and all of

915
00:45:14,400 --> 00:45:17,520
Speaker 1: his companies kind of are because after he's able to

916
00:45:17,560 --> 00:45:19,839
Speaker 1: get these kind of like short term investments and shit,

917
00:45:20,200 --> 00:45:22,480
Speaker 1: it becomes clear that like, well, he's just made his

918
00:45:22,560 --> 00:45:26,080
Speaker 1: airlines a lot shittier like and nobody actually likes flying

919
00:45:26,120 --> 00:45:29,719
Speaker 1: on them. So this again, it's the same thing that

920
00:45:29,760 --> 00:45:32,319
Speaker 1: had happened like a couple of years earlier. Like he

921
00:45:32,400 --> 00:45:35,200
Speaker 1: starts hemorrhaging money. And I'm going to quote from a

922
00:45:35,239 --> 00:45:39,240
Speaker 1: write up on avgeehery dot com, Lorenzo was so heavy

923
00:45:39,239 --> 00:45:41,480
Speaker 1: handed with subordinates at Eastern that in the end, the

924
00:45:41,520 --> 00:45:44,359
Speaker 1: airlines employees basically put their own jobs on the line.

925
00:45:44,400 --> 00:45:46,360
Speaker 1: To get rid of him when he first arrived. He

926
00:45:46,400 --> 00:45:49,000
Speaker 1: tried to turn the company around by incessantly hammering the

927
00:45:49,080 --> 00:45:51,800
Speaker 1: unions to make concessions. He enlisted the help of Eastern

928
00:45:51,880 --> 00:45:54,480
Speaker 1: Airlines as managers who were company men, and enforced what

929
00:45:54,560 --> 00:45:58,279
Speaker 1: some called abusive policies against employees. Workers were required to

930
00:45:58,320 --> 00:46:00,759
Speaker 1: adhere to very strict rules, and we're up for lying

931
00:46:00,800 --> 00:46:03,799
Speaker 1: about non existent medical conditions if they called in sick

932
00:46:03,880 --> 00:46:06,520
Speaker 1: to work. So many machinists were accused of theft and

933
00:46:06,680 --> 00:46:09,000
Speaker 1: or drug use that in one year alone, two hundred

934
00:46:09,000 --> 00:46:13,000
Speaker 1: and sixty two unionized machinists lost their jobs. Psychological warfare

935
00:46:13,080 --> 00:46:15,040
Speaker 1: was even waged on flight attendants who were forced to

936
00:46:15,040 --> 00:46:18,239
Speaker 1: collect garbage on flights, a violation of their contract. What

937
00:46:18,320 --> 00:46:20,720
Speaker 1: if a flight attendant refused to act as a garbage collector,

938
00:46:20,880 --> 00:46:24,840
Speaker 1: they were fired on the spot for insubordination. So Eastern

939
00:46:24,960 --> 00:46:28,799
Speaker 1: gets combined with Continental Frontier and People Express, and you know,

940
00:46:29,080 --> 00:46:31,800
Speaker 1: it's one of those things where like his constant cost cutting,

941
00:46:31,920 --> 00:46:34,480
Speaker 1: like he's looking great on paper for a while, but

942
00:46:34,640 --> 00:46:38,160
Speaker 1: everything starts to fall out, fall apart after this, and Frank,

943
00:46:38,320 --> 00:46:41,279
Speaker 1: you know, is squeezing these people too so much that

944
00:46:41,360 --> 00:46:45,560
Speaker 1: like Eventually, the Eastern Airlines Machinist Union goes on strike.

945
00:46:46,560 --> 00:46:50,120
Speaker 1: And up to this point, like nineteen eighty nine, every

946
00:46:50,200 --> 00:46:52,600
Speaker 1: time the union employees had gone on strike against him,

947
00:46:52,680 --> 00:46:54,879
Speaker 1: Frank had wound up just like beating the piss out

948
00:46:54,880 --> 00:46:57,960
Speaker 1: of them. So he's pretty confident. George H. W. Bush's

949
00:46:57,960 --> 00:47:01,919
Speaker 1: in the White House now, He's like, I got this stuff. Yeah, yeah,

950
00:47:01,960 --> 00:47:05,279
Speaker 1: hold my beer. But Bush doesn't hold his beer. He

951
00:47:05,400 --> 00:47:08,719
Speaker 1: refuse to. He refuses to create a mediation board. He

952
00:47:08,760 --> 00:47:11,640
Speaker 1: basically says, no, the federal government's not getting in on this, Like,

953
00:47:11,680 --> 00:47:14,000
Speaker 1: you're going to handle this alone. And this is when

954
00:47:14,040 --> 00:47:18,560
Speaker 1: Frank thinks back to Andrew Carnegie. So he hires mercenaries

955
00:47:19,640 --> 00:47:22,840
Speaker 1: in order to like escort his employees off the airfields

956
00:47:22,840 --> 00:47:25,920
Speaker 1: when they try to lock down the airfields at gunpoint.

957
00:47:27,000 --> 00:47:29,160
Speaker 1: Like he kind of goes like hard on this shit,

958
00:47:29,280 --> 00:47:32,440
Speaker 1: but again without the government backing him, his heavy handed

959
00:47:32,440 --> 00:47:35,839
Speaker 1: tactics fail. The pilots and the flight attendancy unions are

960
00:47:35,880 --> 00:47:38,000
Speaker 1: so like horrified by what he is doing that they

961
00:47:38,040 --> 00:47:41,520
Speaker 1: go on a sympathy strike. He hadn't thought this was possible.

962
00:47:41,560 --> 00:47:44,040
Speaker 1: He thought he'd broken them enough that this wouldn't happen,

963
00:47:44,360 --> 00:47:47,760
Speaker 1: but they ground his entire Like Eastern Airlines, the third

964
00:47:48,120 --> 00:47:50,640
Speaker 1: largest airline in the US, is grounded right after he

965
00:47:50,680 --> 00:47:54,840
Speaker 1: buys it, and this just causes a cascading like series

966
00:47:54,840 --> 00:47:59,400
Speaker 1: of losses that sends him like bankrupts his companies right right. Obviously,

967
00:47:59,560 --> 00:48:02,640
Speaker 1: Lorenz gets away rich, but he is his empire gets

968
00:48:02,640 --> 00:48:05,560
Speaker 1: broken up and sold off, and like he gets forced

969
00:48:05,600 --> 00:48:08,600
Speaker 1: out of aviation forever. Part of why is that, Like

970
00:48:09,040 --> 00:48:13,080
Speaker 1: the Scandinavians buy Continental airlines, but they only do so,

971
00:48:13,560 --> 00:48:16,440
Speaker 1: Like if the US government will agree to ban Frank

972
00:48:16,520 --> 00:48:19,480
Speaker 1: from working in the airline industry for a decade, they're like,

973
00:48:19,719 --> 00:48:21,360
Speaker 1: we'll pull your fat out of the fire, but you

974
00:48:21,400 --> 00:48:24,040
Speaker 1: can't let this guy near an airline again.

975
00:48:25,080 --> 00:48:25,360
Speaker 2: Shit.

976
00:48:27,360 --> 00:48:30,560
Speaker 1: He tries two years later to create an airline called

977
00:48:30,600 --> 00:48:33,480
Speaker 1: Friendship Airlines, but the Department of Transportation is like an

978
00:48:33,520 --> 00:48:37,560
Speaker 1: absolutely not, like you nearly collapse the entire industry. We

979
00:48:37,600 --> 00:48:40,080
Speaker 1: are never letting you anywhere near a fucking plane again.

980
00:48:41,840 --> 00:48:43,359
Speaker 1: And so he just spends the rest of his life

981
00:48:43,360 --> 00:48:46,280
Speaker 1: as a rich guy. He's got like a Capital VC firm.

982
00:48:46,719 --> 00:48:48,800
Speaker 1: He still makes he's still alive, he still makes a

983
00:48:48,840 --> 00:48:51,320
Speaker 1: lot of money, but he's not allowed in nearplanes anymore.

984
00:48:51,440 --> 00:48:54,920
Speaker 2: Anyway. Oh yeah, now he's doing and look just he's

985
00:48:54,960 --> 00:48:55,920
Speaker 2: doing venture capital.

986
00:48:56,040 --> 00:48:59,239
Speaker 3: Yeah, he get private equity in private equity, as it

987
00:48:59,239 --> 00:48:59,719
Speaker 3: always is.

988
00:48:59,719 --> 00:49:01,200
Speaker 2: Because I guess it always is same.

989
00:49:01,239 --> 00:49:03,080
Speaker 3: The thing I learned was always like, whenever you think

990
00:49:03,120 --> 00:49:05,880
Speaker 3: of business is like shitty, it's and like you're like,

991
00:49:05,920 --> 00:49:07,479
Speaker 3: but this business was like so big.

992
00:49:07,480 --> 00:49:08,040
Speaker 2: What happened?

993
00:49:08,080 --> 00:49:10,920
Speaker 3: It's usually because private equity just bought it. Yeah, and

994
00:49:10,960 --> 00:49:14,000
Speaker 3: it's like slowly being all the good shit is being

995
00:49:14,040 --> 00:49:16,359
Speaker 3: pulled out. There's no people working. So if you like

996
00:49:16,680 --> 00:49:18,520
Speaker 3: when you go into like Toys r Us and looks

997
00:49:18,560 --> 00:49:20,120
Speaker 3: like a fucking spooky ghost.

998
00:49:19,920 --> 00:49:22,680
Speaker 2: Town, wasn't because like they were fucking up.

999
00:49:22,880 --> 00:49:24,920
Speaker 3: I mean like I mean because they were profitable up

1000
00:49:24,960 --> 00:49:26,680
Speaker 3: until private equity bought them.

1001
00:49:26,760 --> 00:49:30,839
Speaker 2: Yeah, private equity starts following it out. Yeah, so it's good.

1002
00:49:31,600 --> 00:49:34,520
Speaker 3: Yeah, it is good. I wonder now I just want

1003
00:49:34,560 --> 00:49:37,319
Speaker 3: to know what fucking Frank Lorenzo was up to? Is

1004
00:49:37,440 --> 00:49:41,160
Speaker 3: have like Savoy Capital or whatever is fucking private equity

1005
00:49:41,200 --> 00:49:41,960
Speaker 3: firms up to.

1006
00:49:42,560 --> 00:49:45,359
Speaker 1: Yeah yeah, maybe that will be a story for another day.

1007
00:49:45,520 --> 00:49:50,560
Speaker 1: But today was the tale of why airlines.

1008
00:49:50,040 --> 00:49:53,680
Speaker 2: Be that way? Yeah? Why do they? Yeah?

1009
00:49:53,960 --> 00:49:56,240
Speaker 1: Anyway, you at anything to plug miles.

1010
00:49:56,880 --> 00:50:01,640
Speaker 3: Uh, just go at my of Gray wherever you see

1011
00:50:01,680 --> 00:50:04,040
Speaker 3: at based Yeah.

1012
00:50:04,280 --> 00:50:09,239
Speaker 1: Yeah, yeah, go to at miles of Gray. Listen to

1013
00:50:09,280 --> 00:50:16,200
Speaker 1: the daily Zeitgeist. Yeah, and uh, I don't know, Uh

1014
00:50:16,400 --> 00:50:18,160
Speaker 1: I probably I was going to make a joke about

1015
00:50:18,400 --> 00:50:20,440
Speaker 1: the pilots and the pipe bombs, but that's probably going

1016
00:50:20,520 --> 00:50:20,839
Speaker 1: to get.

1017
00:50:20,760 --> 00:50:22,920
Speaker 2: Us some trouble. Probably, Yeah, I would you still want

1018
00:50:22,920 --> 00:50:24,320
Speaker 2: to fly? Yeah?

1019
00:50:24,400 --> 00:50:33,200
Speaker 1: Yeah anyway, ad free. Cooler Zone Media whatever We're done later.

1020
00:50:35,080 --> 00:50:37,800
Speaker 1: Behind the Bastards is a production of cool Zone Media.

1021
00:50:38,160 --> 00:50:40,759
Speaker 2: For more from cool Zone Media, visit our website cool

1022
00:50:40,840 --> 00:50:44,840
Speaker 2: Zonemedia dot com, or check us out on the iHeartRadio app,

1023
00:50:44,880 --> 00:50:47,279
Speaker 2: Apple Podcasts, or wherever you get your podcasts.