Against All Odds, Adventurous Joseph Ritchie Bids for Eastern Airlines
NEW YORK (AP) _ Don’t tell Joseph Ritchie he can’t buy Eastern Airlines.
The quixotic bidder for the strikebound carrier may not have experience in the flying business but he’s a math wizard who’s vaulted over other daunting obstacles to build a successful company from scratch. Along the way, he was a bus driver on Chicago’s southwest side, a prison guard and a deputy sheriff.
Ritchie, 42, is principal owner and president of Chicago Research & Trading Group, a leading options trading company, yet has never studied business or economics.
″You make more by paying more,″ Ritchie said in an interview during a trip to New York. ″The more you reward people, the more you’re going to get back and the more you’re going to make in the long run.″
Ritchie boasted that CRT, with around 600 employees, pays many of them twice the industry average.
Eastern boss Frank Lorenzo, on the other hand, has been locked in a cost- cutting battle with the airline’s unions that precipitated the four-month- old strike.
As a manager, Ritchie said he prefers to ″turn people loose″ rather than control them.
Ritchie, a conservative Republican, is the American partner in JV Dialogue, a U.S.-Soviet joint venture that sells personal computers in the Soviet Union. He attributes its success to ″the human side of the equation.″
The people who command Ritchie’s attention now are the 31,000 pilots, Machinists and flight attendants who worked for Miami-based Eastern before their walkout that started March 4. Since early May, Ritchie, in alliance with Eastern’s three unions, has been trying to buy the troubled carrier despite several stinging setbacks.
Ritchie has offered $50 million and the unions have kicked in another $50 million as well as wage concessions totaling $210 million. In addition, the unions have pledged up to $175 million from their wages if certain goals aren’t met during the first six months of operation under joint ownership.
Like a modern-day Don Quixote, Ritchie seems to be tilting at windmills. Lorenzo, chairman of Eastern’s parent Texas Air Corp., has increasingly gained momentum for his plan to rebuild Eastern as a smaller carrier and sell $1.8 billion in assets to pay debts.
The federal bankruptcy court in New York, where Eastern sought protection from creditors on March 9, has removed Ritchie’s buyout plan from consideration, and Lorenzo has dismissed it as a ″joke″.
Why does he go on?
″I think the people at Eastern understand why,″ Ritchie answered with a Buddha-like smile. ″They’ve really become like brothers and sisters to me.″
Besides, although the bankruptcy court proceedings have turned against him, Ritchie says he believes there’s still hope from another quarter: Washington. Despite the impression he gives of farmboy ″Aw, shucks″ naivete, Ritchie is plugged into the Washington power grid. He makes frequent trips to the capital, where he has attended meetings with White House aides and members of Congress.
He appears to have some reason, at least, to be hopeful. Newt Gingrich, House Republican Whip, recently wrote to Transportation Secretary Samuel Skinner asking him to get involved in Eastern’s bankruptcy case.
Some congressmen from both parties are concerned that the disappearance of Eastern as a major carrier could threaten airline competition - already delicate because of the industry’s consolidation since deregulation in 1978.
That concern led the aviation subcommittee of the House Public Works and Transportation Committee to hold a hearing on Eastern on June 29, and it extends to some high-ranking members of the Bush Administration, according to Washington insiders.
If the Transportation Department intervened in the case, it could bring at least a temporary halt to the sales of Eastern assets that the bankruptcy court has been approving, Ritchie said.
When he talks about Eastern, Ritchie’s dark eyes flash, framed by his silver-white hair and trim mustache. Fresh off the Trump Shuttle from Washington, he rotated his thin, wiry frame in stretching exercises before sitting.
Ritchie lives on a farm 55 miles west of Chicago with wife Sharon and their nine children, whose ages range from 1 to 23. Until now, he has mostly evaded the press, leaving phone calls unreturned and sprinting out of bankruptcy court hearings to a waiting limousine. His testimony at the congressional hearing on Eastern was a rare public appearance; he has never given a press conference.
″My first impression was, ’This man’s not for real,‴ said a Ritchie associate, who asked not to be identified. ″I found him refreshingly naive.″
Ritchie says he first got the notion of engrossing himself in the Eastern saga when he read an article in Time Magazine about the strike back in March.
Some sources in the options market say Ritchie’s company, CRT, has a reputation for honesty and efficiency. ″They’re known as being very moral,″ said a stock options trader who requested anonymity. ″They want their employees to become rich, too,″ he added, noting CRT’s liberal profit-sharing policy.
Candidates for jobs at CRT have to pass through an elaborate interviewing process involving encounters with as many as 15 people.
After graduating Wheaton College in suburban Chicago with a bachelors degree in philosophy - ″I hated school,″ he says - Ritchie took the bus driving job in Chicago. That was followed by a 1-year stint as a guard at the Cook County House of Corrections, where he played chess with the inmates.
He became deputy sheriff in 1973 in Du Page County, Ill., where sheriff Richard Doria remembers him now as ″very quiet, obviously an intelligent kid.″ Ritchie then moved to Los Angeles and started trading precious metals, returning to Chicago in 1975 and starting CRT with a couple of partners in 1977.
He is considered a math whiz who cracked the problem of Rubik’s Cube in less than five minutes, and developed a basic mathematical formula for options trading that helped CRT mushroom into a leader in the field.
End adv for Sunday July 16