Reality CheckLarry Light and Julie Tilsner
LORENZO-HATERS SAY Washington should squelch Frank Lorenzo's request to start a new cut-rate airline, ATX. Under pressure from unions and their congressional allies, the Transportation Dept. has put his application under highly unusual scrutiny. The anti-Lorenzo crowd says he's not fit to run ATX since the two lines he headed, Continental and Eastern, went bankrupt--and Eastern is now defunct. Plus, Eastern had safety problems that resulted in its paying a $9.5 million federal fine.
IN REALITY, Lorenzo's past cost-cutting tiffs with labor are why he's getting this harsh treatment. Plus he's not the most personable fellow. But a self-defeating strike was the main reason for Eastern's demise, not Lorenzo. All carriers, not just his, have gotten whacked economically during the past few years. Many of Eastern's safety violations occurred before he bought it in 1986. Last month, Lorenzo's application was denied by a Transportation Dept. administrative law judge, displeased about his inability to produce 10,000 pages of documents in 14 days. Even Transportation couldn't stomach that, ordering a full hearing. And you thought the U.S. deregulated the airlines.