Lorenzo Tells Business Students Why Ueberroth Deal Failed With Eastern, Bjt
Apr. 13, 1989
NEW YORK (AP) _ Texas Air Corp. Chairman Frank Lorenzo said Wednesday he turned down Peter V. Ueberroth's proposed purchase of Eastern Airlines because a takeover by a trustee was bad for the airlines' shareholders.
Lorenzo gave his reasons for the purchase collapse to Columbia University graduate students at a lecture that was closed to the media.
Ueberroth offered $464 million for the strikebound airline and the deal for a time seemed likely until talks broke down for good over the issue of who would control the airline as it emerged from bankruptcy.
Eastern's unions demanded that the courts appoint a trustee but Lorenzo refused.
''He blamed it (the collapse) on the unions,'' said Michael Danitz, 27. ''He felt he should have been running the airline in the interim. He felt he was better qualified being in the airline (business) than somebody who's a trustee of the court.''
Steve Mazzari, 27, another student, said Lorenzo gave the audience a historical perspective on the Eastern troubles and then explained ''why the Uebberoth deal did not fly.''
Lorenzo told the students he wanted to ''run the company until we can pay our shareholders,'' he said. ''He said he was looking for the best deal in the interest of the shareholders. He thought hiring a trustee was not in their best interest.''
Another student who asked not to be identified said Lorenzo told them he planned to sell some of Eastern's assets ''and that will be better for the shareholders.''
About 100 protesters marched outside Uris Hall, where Lorenzo spoke for 20 minutes about the airline industry since deregulation and then answered students' questions for another 40 minutes.
One protester carried a sign that read, ''Frankie smooth talk '59. Some things never change.'' Lorenzo was graduated from Columbia in 1959.
The executive avoided the protesters by going through an underground entrance to address the lecture which had been scheduled since November as part of the university's Distinguished Lecture Series.
Marie-Odile Taillard, chairwoman of the series, said Lorenzo had asked that reporters not be among the 250 to 300 graduate business students who warmly applauded him at the conclusion of his lecture.
But not all the students were impressed.
''I went in there with a pretty bad impression of him and it didn't change,'' said one student, who asked not to be identified.
''He felt he was a scapegoat. He blamed everybody else for the situation. He seemed very unemotional,'' the student said.
Outside, striking Eastern pilot Harry MacLaughlin, 58, marched with other protesters as four security officers checked student identification cards at the building's front entrance.
''He's a brilliant person, a financial wizard,'' MacLaughlin said of Lorenzo. ''But he treats his employees in a demeaning manner.''
Danitz said one student asked Lorenzo what the students should do if they someday find themselves embroiled in a difficult labor situation.
''If it's a non-union place, don't let them in,'' Danitz quoted Lorenzo as saying.
''He said if management is doing a good job, there's no reason for unions to come in,'' Danitz said.