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People Express Employees Saw Signs of Trouble Years Ago

September 16, 1986

NEWARK, N.J. (AP) _ The signs were apparent to employees of People Express Inc. as far back as two years ago. The same customers weren’t showing up. Plane fares didn’t cover expenses. Workers were spread too thin.

By the beginning of September, many employees gave the maverick airline one more month, and breathed a sigh of relief every day they drove to the carrier’s terminal at Newark International Airport and saw a plane departing.

As a result, the company’s decision to sell itself to Texas Air Corp. is viewed as a near miracle. Having a job - no matter who the boss is - is better than no job at all, the employees reason.

Many employees expect the airline to be operated more efficiently by Texas Air Chairman Frank Lorenzo than it has been by People Express founder Donald C. Burr.

Some believe Burr did not delegate enough responsibility and let ego and emotions enter into too many decisions.

But they also feel some apprehension and great optimism.

″It will be the largest airline in the free world,″ said Paul Santasieri, a customer service manager.

The proposed acquisition, however, will require an attitude change because People Express employees have been used to viewing Lorenzo as the opposition, he said. Texas Air also owns New York Air, a People Express competitor.

Santasieri, a former high school social studies teacher, said People Express was in a no-win situation: It had to expand to ″fire at the big boys,″ but the growth triggered insurmountable expenses.

″It was booming here. It was an exciting, vibrant place to work,″ Capt. Bob Edmonds, a pilot, said of the company’s early years.

Edmonds, who began working for People Express after being furloughed in 1983 from Continental Airlines in El Paso, Texas, a Texas Air subsidiary, soon saw changes.

Employee turnover was high. The company wasn’t making money. Promises for better pay did not materialize. The company’s stock price - a critical element in the employee profit-sharing program - was not increasing. Worker morale plummeted.

Soon, competitors started to play People Express’ game and slashed prices.

″This is a gold mine. I still perceive it to be one,″ said Edmonds, a Toms River, N.J., resident who was recalled last week to work for Continental and plans to make the move.

But he said marketing, scheduling and other practices crushed the potential of People Express.

Some employees also said Burr allowed emotions to sway key decisions, such as the ill-fated move last November to buy Frontier Airlines.

Lorenzo, Burr’s old boss at Texas International Airlines, Texas Air’s predecessor, also was interested in Frontier.

And some People Express employees said Burr was openly thrilled about beating out Lorenzo at the time.

Frontier ended up costing People Express $60 million in the first six months of this year. People Express filed for bankruptcy protection for the carrier when United Airlines withdrew from a deal to buy it.

″I think it’s the best thing that ever happened to us. I didn’t think we were going to make it otherwise,″ Fred Lagno, a pilot from Queenstown, Md., said of the pending sale to Texas Air.

Like most other employees, he heard rumors Monday morning about the sale.

By early afternoon, a People Express executive had read a news release to a huddle of pilots, a short time after the announcement had been made in New York.

Lagno attributed the company’s problems to the competition by other carriers. They offered the same price as People Express - along with free food, better on-time performance and fast maintenance.

People Express charged customers for beverages and snacks served on board, and for any luggage that was checked.

″Nobody (at People Express) made the effort to give the people good, efficient service,″ Lagno said, adding, ″It’s a scary industry.″

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