Part One: Frank Lorenzo: The Man Who Ruined Air Travel

Robert sits down with Miles Gray to talk about Frank Lorenzo, the vulture capitalist who murdered the airline unions and made flying terrible.

(2 Part Series)

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Episode Transcript

Speaker 1 (00:01):
Uh, it's behind the bastards the podcasts where I talk
about my sleeping habits and Miles talks about his baby.
How you doing, Miles, I.

Speaker 2 (00:12):
Just started recording. But yeah, I'm great. I'm great. So yeah,
I'm good man, I'm good. Thanks for having me. It's
been too long. It's been too long. I was wondering,
been too long because I would be selfish. Baby. Yeah,
I know. Well, now that that guy's out of my
way and out of the you know, got that obstacle
out of uh or my career obstacle out of the way,

(00:33):
I'm back. Baby.

Speaker 1 (00:34):
He hit six months and you're just like locked in
now it's like done.

Speaker 2 (00:38):
Yeah, yeah, you're old. No find a life exactly. Yeah.
Just you know, like sit in this cardboard box, Yeah,
some of my old Ninja Turtle toys and like an
air pod playing or whatever you know, call it home
pod playing and you're good. Yeah, Miles. How do you
feel about airplanes?

Speaker 1 (00:57):
However?

Speaker 2 (01:00):
I mean, I like, as a kid, I like going
on airplanes. But you know, you all, you never know
when you're on those things, you never know. That's my
feeling on them.

Speaker 1 (01:10):
Like sometimes you get tricked and realize you're on a
plane only belatedly you're like, Wow, what an odd, very
long house with strange windows, And I'm.

Speaker 2 (01:19):
Always just thinking they're gonna crash.

Speaker 1 (01:21):
Oh really, Yeah, I don't think that happens always planes anymore.

Speaker 2 (01:25):
Yeah, not not as much. But I think I've seen
too many like eighties movies that had like plane crashes
in them, that like all get on and then like
when I look at the other passengers on, like like
music starts playing in my head and I'm like, these
are the people that lost their lives on this flight. Yeah,
you know, I think the thing that.

Speaker 1 (01:43):
I that I find unsettling is less like because planes
are pretty statistically safe except for every now and then
like that maybe that Malaysian pilot or those guys in France.
You get like a pilot who just decides to end
it all and take every one with them, And I
find that slightly unsettling. You gotta trust them, you gotta

(02:04):
trust them, you gotta trust them. And pilots are the
kind of people who become pilots. You know, if you've
ever known a pilot, oh boy, that's not a trustworthy
breed right there.

Speaker 2 (02:16):
This is an anti pipe.

Speaker 1 (02:17):
No.

Speaker 2 (02:17):
I feel nothing for pilots one way or the other.
So I feel nothing the.

Speaker 3 (02:22):
One person I don't know if it's a pilot, Yes,
that does I was like, I was like, yeah, okay,
maybe maybe it is a.

Speaker 2 (02:27):
Thing that I think about it. Yeah, I know somebody
who has a pilot's license. Uh, and they're kind of
like a more like a pirate than a pilot. Okay, yeah,
I get the vibe.

Speaker 1 (02:37):
Yeah, yeah, yeah, you know, miles flying outside of the occasional,
largely irrational fear of death has become both safe and
also deeply unpleasant. Like it sucks, Like I think for
most people, if you have to get on a plane

(02:58):
to go somewhere, the getting the plane part is pretty
thoroughly an unpleasant process, right, Oh yeah, and it sucks,
like comprehensively, Like it's not just that, like being on
a plane sucks because you're crammed in with all these
people and like, yeah, it's just this physically.

Speaker 2 (03:14):
Also, I fucking hate though. Now how basically they want
to make seats as uncomfortable as fucking possible. So you're like, well,
we have economy plus economy plus plus yeah, economy plus
cubed business first Diamond, And you're like what the fuck
can I just have like like just slightly more room
because I'm over six feet tall, Like, just please.

Speaker 3 (03:35):
They also have the thing now where like they have
the Okay, you can pay less, but you don't.

Speaker 4 (03:42):
Get to pick your seat. Yeah that that that used
to like used to suggest.

Speaker 2 (03:47):
To be the way the planes worked. Yeah, everything to
fucking add on. Now.

Speaker 1 (03:51):
It's good that we're talking about this because today we're
talking about the guy who made it that way, right,
We're talking about the dude who made all that be
a factor in flying, who like turned it from a
process where you just bought a ticket to go to
a place and you were treated like a human being
to this this bizarre, weird capitalist nightmare where you've got

(04:13):
like eleven different options and all of them suck way
more than being on a fucking train. That's who we're
talking about. His name is Frank Lorenzo, and he made
planes suck. Yeah's it was a fun little monster today
getting some capitalism bad guy here.

Speaker 2 (04:30):
So I like this, Okay, so good. I don't have
to deal with too much. I can just deal with
my own frustrations that are based off of being on
a plane rather than something deeply horrifically fucked up like
every other time.

Speaker 1 (04:42):
Yeah, I mean he's it's fucked up in that he's
like your normal sort, he's like your uber capitalist kind
of asshole. But it's also this thing where like the
whole airline industry, like all of the pilots and ground
crews and stewardesses and stuff who have been working in
it for a while like blame this guy for reathing
that sucks with air travel, and some of the things

(05:03):
they blame him for are like things that they kind
of did, Like it's not you know, it's not all
on him, right, right, but uh yeah, it's it's an
interesting story and it's it's it's pretty bastardy. So that's
what we're gonna talk about this week. We're gonna about
Frank fucking Lorenzo.

Speaker 2 (05:19):
Hm uh huh. So.

Speaker 1 (05:20):
Francisco Anthony Lorenzo was born on May twenty ninth, nineteen forty,
in New York City the Wendy Apple but he was
the third of three sons, and his parents were named
Oligario and Anna Lorenzo. Everything's fine with his name except
for the Anthony as a middle name. I don't trust
people with an Anthony, right, name. Anthony's a first name,

(05:44):
could be a last name. It's never it shouldn't be
a middle name.

Speaker 2 (05:47):
Wait, why do you still feel so fucking strongly about
what a middle name? I don't think it's right as
a middle name.

Speaker 4 (05:52):
Why are you being so conspiratorial today?

Speaker 2 (05:55):
What do you mean? I don't know, it's an interesting
I'm just we're gaining perspective and Robert's mind, like, because
I think I feel like seventy percent of like Catholic
men's middle name is Anthony. Yeah.

Speaker 1 (06:06):
Well, I don't trust the papists, you know.

Speaker 2 (06:09):
Like, yeah, that makes sense. They're loyalty for Kyles. Yeah exactly. Yeah,
what is a good middle name? Like tittlely bop? Anyway,
so forgot all the middle names.

Speaker 1 (06:28):
So his dan ran a beauty salon and his mom
worked at the beauty salon, and they were like pretty comfortable,
Like they're not rich, but they're pretty solidly middle class.
They're doing well enough that his dad is able to
play the stock market as a hobby. He's again he's
not like, you know, fucking printing paper, but he's got

(06:49):
a portfolio that's worth like one hundred and twenty grand
by the time he dies. Which you know, you're talking
like the seventies, the eighties. That's not bad, that's not
like he's doing pretty good.

Speaker 2 (06:58):
Yeah.

Speaker 1 (06:59):
So one of the things that Oligario teaches his son
about is the concept of risk. And when we say
risk in this context, we mean gambling, right, Like when
money people talk about risk, they're talking about like whether
or not you have a good shot of like, you know,
winning when you throw your your your dice at that
roulette wheel or whatever. Frank was pretty good at this

(07:21):
from the beginning. He showed an aptitude for numbers, and
he was really fascinated specifically with how he could fuck
around with numbers in order to make money. When he
was in junior high school, he ran the school betting
pool on the World Series, which was illegal at the time.

Speaker 2 (07:34):
But what are you a cop? Come on? So wow,
So he was running just taking bets on the fucking
world Yeah, takes bets on the World Series. Whimsical times. Yeah,
good stuff.

Speaker 1 (07:46):
The single most enduring memory Frank had of his childhood
was of the family apartment, which sat right under the
approach for LaGuardia Airport. As a little kid, he'd spend
hours watching the different planes from various airlines land. Now
this is a period in which flying is pretty new, right,
Like if you're watching planes fly overhead, and like the

(08:07):
fifties and sixties, we've been doing that, you know, about
as long as today Paul Rudd has been alive, right, Like,
that's what you gotta think if you're watching like planes
in the sixties, like planes as a concept or about
as old as Paul Rudd is to us.

Speaker 2 (08:23):
Wait, and what do we when we say Paul Rudd,
what are we dating that from his birth or his
entrance into our sort of pop culture consciousness?

Speaker 1 (08:32):
Yeah, I would I would say from his birth. But like,
either way, I don't remember a time without Paul Rudd,
do you.

Speaker 2 (08:39):
I mean, for me, I think Clueless is the the
punctuation point that is, like, that is the point where
he that's the big bang, I would say.

Speaker 1 (08:48):
For yeah, that's the big bang for Paul Rudd, or
at least for me. Yeah, yeah, the Permian explosion.

Speaker 2 (08:55):
Exactly. He's still redational waves of that movie from when
Paul Rud came on the scene.

Speaker 1 (09:01):
Yeah, so he's watching the planes fly overhead. He doesn't
know yet about the movie Clueless because it's the sixties
but one day he presumably will watch it. So by
the time Frank is making memories, Man had only been
taking commercial international trips for about twenty five years. There
was still a magic to air travel then, and it

(09:23):
was only slightly dimmed by all of the people who'd
gotten incinerated from the sky during World War Two. Airlines
in those days were run by the same kinds of
guys who'd helped invent air travel as like a thing.
So these dudes like airlines CEOs today are just like
any kind of ceo, right But back in the day,
airline CEOs were all former pilots who'd like been test pilots,

(09:45):
they'd like flown in wars, and they were often crazy people,
right like, that was just the kind of person who
could get these jobs. A representative example of the pack
was Robert Foreman six, the CEO of Continental Airlines, which
was the most prestigious air line in the country during
Frank's childhood. Six became the CEO of that company in
nineteen thirty six and held the job until nineteen eighty,

(10:08):
by which point he was like senile in the company
was failing because he didn't know how to do anything anymore.
He had dropped out of high school at seventeen and
gotten fired from his sales job for taking flying lessons
on company time. He'd received his flying license at twenty
two and become an air racer. And he got like

(10:29):
rich during World War Two because he used all of
his airlines planes to take US troops to Europe for
the Army Air Corps. Like that was just a thing
the big airlines did as they were like I guess
we're having a war, Everybody like take your Yeah. It's
like it's like if we were like diverting seven thirty
sevens to Ukraine so we could like kick explosives out

(10:50):
of the back match.

Speaker 2 (10:53):
I mean why not yet? Yeah with Jet Blue. Yeah,
that's when you see Spirit Airlines flying overhead. Yeah.

Speaker 1 (10:58):
After the war, he got rich, particularly because like he
was the dude who started inviting celebrities to take like
you know trips on his planes to you know, vacation
destinations or to Europe. Like the idea of the jet
set is created in part by like Robert six, Like
that's the dude that he is. He makes flying sexy.
He also beat the absolute hell out of his wife

(11:20):
and kids. But like that kind of goes without saying, right,
the different time rich maniac and this part period of time.

Speaker 2 (11:27):
Yeah, probably, holy shit, not great, you're saying that whole
like I know, like there are these places in la
where it's like the inside of an old airplane where
people can pretend it's like the glamorous air travel time.
That's all because of this.

Speaker 1 (11:40):
Yes, Bobby six is the dude who like creates that
cultural touchstone or helps him and then became a decrepit
monkey skeleton in his ladder years. Okay, yeah, yeah, yeah,
for some reason, a lot of guys have trouble giving
up power and influence miles wild stuff. Thankfully our generation
will never know anything about that.

Speaker 3 (11:59):
No.

Speaker 1 (12:00):
So then there was Edward Vernon Rickenbacker. Who, Man, that
is a pilot name. That's a hell of a pilot name.

Speaker 2 (12:07):
He could be Veron. How about Vernon is a middle name.
I'm fine with Vernon.

Speaker 1 (12:11):
Vernon's a fine middle name, you know, a little old timy,
but yeah it works for me though. Yeah, no, tittally Bob. Sorry,
So obviously Edward Vernon Rickenbacker. That's a World War One
fighter pilot, and he was, in fact a World War
One fighter pilot. He wins the Medal of Honor. He's
actually the most decorated US flying ace of the war.
And as a side hobby is a race car driver,

(12:32):
because like, why wouldn't you be the coolest dude you
could possibly be?

Speaker 2 (12:36):
It was of the sky.

Speaker 1 (12:38):
Yeah, every now and then, if he saw one by
the edge of the track, he'd just like run him over,
you know, get a German blonde hair, let's showio like
most grand pilots. Yeah, gotta get the fuck out of
that state. And his pin shot for Devil Daredevil read

(12:59):
mainly it came from the fact that he was like
the least lucky person on the planet. As a toddler,
he was hit by a street car and knocked twelve
feet down into an open sewer. His brother twice had
to save him after he was hit by passing coal
cars as a little kid. One time his school caught
on fire and he nearly died trying to save his
coat from the building. So, yeah, like this d sounds

(13:25):
like a really normal When was he born in like I.

Speaker 2 (13:28):
Don't know, you know, late eighteen hundred something like that.
Yeah that sounds like, yeah, that sounds like a very
normal childhood. I think back then it's like, yeah, everyone
was fucking ran over into an open funting sewer as
a baby.

Speaker 1 (13:41):
Yeah, he's just like constantly it like getting maimed and beaten,
and it's like, I guess the sky could be worse, right, Like, yeah,
German bullets aren't more dangerous than the street in nineteen thirteen,
so that the it.

Speaker 2 (13:55):
Is just such a different time because like, you know,
you look at those old pictures of like what jungle
gyms used to look like for kids, like in the
fucking twenties, and it was just a big gun on
the ground. Yeah, exactly. It was like a knife pit
with like a bunch of poles that were like twenty
five feet high, with like you know, handles and shit
on it. So kids could just sit on top and
break their fucking necks.

Speaker 1 (14:15):
Yeah yeah, if they If they die, they die. So
after the war, he founded a motor company, and this
motor company went very quickly bankrupt, but he was famous
because he'd been such a good fighter pilot, so he
was still able to create another company. This one was
an airline called Florida Airways, which collapsed because would you

(14:36):
fly on Florida Airways, Like absolutely not, No, It.

Speaker 2 (14:39):
Sounds like you're gonna get robbed. Like they're like, you idiot,
you really thought this was a fucking airline. Yeah, this
your fucking money.

Speaker 1 (14:45):
Now you're gonna get robbed and you're gonna have to
sit next to the guy until it lands in Sarasota, right, Like.

Speaker 2 (14:51):
Yeah, no, there's no flight, Robert, there's no flight Florida
air that's a euphemism. It's a code word for a
fucking like armed robbery breaking.

Speaker 1 (15:00):
Come on, Oh, yeah, he's flying Florida Airways now yeah.

Speaker 2 (15:03):
Oh, looks like you got two first class tickets of
Florida Airways.

Speaker 1 (15:09):
So Florida Airways also collapses.

Speaker 4 (15:12):
Like that's not real. That has to be a fake name.

Speaker 1 (15:15):
No, No, that's that's the real that's the real name.
And it becomes the foundation of a lot of modern
air travel because he takes Florida Airways while it's failing,
and again largely because he's just got so much famous
guy clout, he's able to merge it with Eastern air
Transport to create Eastern Airlines, which becomes one of the

(15:35):
titans of the first Big age of air travel. He
also was a cartoonist. Weirdly enough, basically if you wanted
to do it as a job when you were nine.

Speaker 2 (15:42):
This guy lived it.

Speaker 1 (15:44):
He was in every way a cooler dude than the
subject of our episode, Frank Lorenzo.

Speaker 2 (15:49):
I just used to be a flagpole center too.

Speaker 1 (15:53):
So by the time our boy Frank was in his
late teens, his family was doing well enough that his
father sent him to a super fan and see rich
kids school, Forest Hills High in Queen's. In his description
of Forest Hills, Lorenzo emphasized emphasizes what a fish out
of water he was. He's this blue collar Spanish kid
and a school filled with white collar Jewish kids. But

(16:15):
like his dad's like playing the market as a hobby
and as a business owner. So he's like, it's not
that blue collar. Like he over emphasizes it. There's a
little bit of like, I don't know, Jewish panic type
deal where he's like, well, compared to all of these
these Jewish kids, I was real commoner, you know stuff.
It's like, come on, man, chill at, chill out, Frank.

Speaker 2 (16:37):
So the fuck up.

Speaker 1 (16:38):
It does sound like it was an insufferable school, because again,
everybody there is pretty rich. One of his classmates was
John Winnekure, who went on to edit Paris's International Herald Tribune.
Simon and garf Uncle were one year below him. I
wish there was something more interesting about that, but like
that's that's the only fact I found about it. The
one real warning sign Frank exhibited at this point is

(17:01):
that he volunteered to work as a hall monitor, which is, oh, yeah, cop, no,
absolutely not.

Speaker 2 (17:08):
That's uh yeah, I found it acceptable. I found out
my partner her majesty was like a hall monitor. Like,
when I found that out, it I thought I had
like an existential crisis almost where I was like, what
the Like, you're a cop and you wanted to do that.
It's like yeah, and you got the you got to
wear the sash and shit, I'm like, this is fucked up.

Speaker 1 (17:30):
Yeah, that's that's uh, that's bleak, you know I I uh,
I feel like hall monitors.

Speaker 2 (17:37):
Yeah.

Speaker 1 (17:37):
It's it's like the DEA for not wanting to be
in math class. Yeah right, it's it's yeah, it's r
O t C for you know, baby whatever, baby cops.
I mean, you don't actually get to do anything in
r O t C except what looked like a piece
of ship and that stupid uniform to get to wear.

Speaker 2 (17:55):
It though, and fucking salute the flag. Honor the flag, man.

Speaker 1 (17:58):
I'll have a lot of fucking saluting the flag. Jesus Christ.

Speaker 2 (18:02):
So did the ROTC kids you have? I had ROTC
kids like uh in my school that were basically like
have like doing stolen valor, like wearing metals and shit,
like on a weird jacket. As they put the flag out,
I was like, is.

Speaker 1 (18:15):
This, Oh man, they got in our ROTC We got swords.
We got swords for a while, and then one of
the kids drew his to like attack some other kids,
and then they were like, I guess we can't have
them all wearing swords anymore.

Speaker 2 (18:30):
Were they super sharp? No? I mean they were.

Speaker 1 (18:34):
They were like swords, but they were like parades ceremony.
They had not been sharpened, but like, yeah it was
still a sword.

Speaker 3 (18:41):
Yeah, yeah, that was obviously how that was going to go.

Speaker 2 (18:45):
Of course, yeah that was going to go.

Speaker 1 (18:47):
And it made me just think that everyone at school
should have to wear a full saber at all times.
But that's that's a separate belief.

Speaker 2 (18:54):
So honestly, I joined ROTC for the sword. Like if
I heard it's like a lot of people did a
lot of people did. I'm doing it for the sword.
Do it for the sword, y'all? Do it for the sword.

Speaker 1 (19:03):
So at this point his life goal, Frank's life goal
was to study engineering when he went off to college.
He graduated in the late fifties and was accepted to
Columbia University, and this right up from Texas Monthly describes
his time in college pretty well. The making of Frank
Lorenzo seems to have begun at Columbia University, where he
graduated in nineteen sixty one and later endowed a scholarship

(19:25):
in his father's name. He was well known there amid
the two thousand students. He joined the top fraternity, Sigma Kai,
and served in student government as secretary treasurer of the
Undergraduate Dormitory Council.

Speaker 4 (19:36):
That was worst fraternity at my college.

Speaker 2 (19:39):
They liked Sigma Kai.

Speaker 4 (19:40):
They got like removed for doing that shit.

Speaker 1 (19:43):
Oh yeah, he's just waite, Sophie. He's a piece of
shit in this school, all right.

Speaker 4 (19:47):
Cook cool.

Speaker 1 (19:48):
Former classmates use words like glib and slick to describe him.
He tended to skate close to the edge, recalls classmate
David C. Furman, Lorenzo's college nickname around his flat Frankie
smooth Talk. The monikers seemed particularly well suited and lighted.

Speaker 4 (20:03):
Ship up right now.

Speaker 2 (20:04):
No, he was Frankie. He was Frankie Smooth Talk.

Speaker 1 (20:07):
So and and so the thing that he fucking does
in college that's so funny is like he's in this
campus political organization that's that's linked to all of the
Christian fraternities like Sigma Kai, to try to make sure
that the Christian fraternities get a bunch of student officers,
and they're specifically they're opposed. It's not like a left

(20:29):
versus right thing. The Christian fraternities are fighting the Jewish fraternities.
So first off, you could guess there's some problematic shit
being said in the background. And so yeah, he's he's
like basically he's there Roger Stone. And the night before
the final day of balloting for seats on the student
governing board, Lorenzo meets with a bunch of other like

(20:51):
these Christian frat guys in a dorm room to discuss quote,
the possibility of voting twice. So he and all of
these other guys like make a list of students who
probably wouldn't vote and then go vote illegally in their
names to rig the election. So he's like he's he's
the Roger Stone, or at least the e Howard Hunt

(21:13):
to like shady kind of bigoted college politics.

Speaker 2 (21:17):
Wow, what an entry way.

Speaker 3 (21:19):
M h.

Speaker 2 (21:19):
It's like, yeah, yeah, we had to dilute the Jewish vote,
but yeah, some voter fraud. What Yeah, exactly, I got
this shareholder meeting covered what I feel like I'm going
to get.

Speaker 1 (21:31):
I feel like I can guarantee you they didn't say
we're going to beat the Jewish frats. They used a
different word.

Speaker 2 (21:37):
Yeah. Oh yeah, oh yeah, I was doing the version.

Speaker 1 (21:42):
Yeah no, these guys are definitely a slur heavy frat.

Speaker 2 (21:47):
Oh yeah.

Speaker 1 (21:48):
One of the things I find really funny is that
Lorenzo's like, he's like their Roger Stone, but he's terrible
at committing crimes. So he is the only member of
this conspiracy who gets caught voting twice, the student paper reported.
At first, he denied everything and claimed that he had
tried it as a stunt to test the election commission
to see if anyone can actually get away with voting twice.

(22:11):
So he actually does the whole like I was just
testing to make sure that your guys had good security.

Speaker 2 (22:16):
Oh good, good, good to know, good to know. Yeah,
that's like this shit that the fucking guy's on to
catch a predator. Say, yeah, when they get caught, Like
I was here to warn the kid about what can
happen when you talk to people on the internet. Yeah,
that's why I came. Uh huh, yeah, he does that.
You know, guys, you know who else engages an anti

(22:43):
sent note, We shouldn't say that, So how do we
Let's just pull the ads right now. Oh, all right,
and we are back. We're back, and we're talking about
our buddy, Frank Lorenzo, the Roger Stone of anti Semitic

(23:05):
college election shit. So the newspaper continues that story. After
he pretended to be testing the election system, Lorenzo soon
cracked under the pressure of the board's questioning and admitted
to voting twice. He and five others were banned from
ever voting again in a Columbia election. So he has

(23:25):
permanently he has a school politics felon. He's permanently lost his.

Speaker 1 (23:29):
Right to vote at Columbia University. It's funny, now, this
was before culture war politics had become as monetizable as
they are today. Like, I think there's if this kid
is going to school in the present, he never becomes
a business guy. He like joins Turning Point USA straight
out of college and like tries to milk this for forever. Yeah,

(23:52):
he has a podcast on Daily Wire. Oh yes, absolutely so.
Yeah Lorenzo. Because the campus Pressed doesn't have much to
focus on, Lorenzo kind of becomes their Nixon for a while.
When classes start back up in the fall, the paper
starts a campaign to make him resign from his position
on the dorm room Council based due to his quote

(24:12):
lack of any semblance of self respect and honor. Now
every someone, especially because it's like you're on the dorm
room council. Now. I've never went to Columbia, but I
did briefly live in a dorm in college before I
dropped out. And the only thing I know about our
dorm room officers is that I bought liquor from them

(24:34):
when I was eighteen.

Speaker 2 (24:35):
Well yeah, exactly, yeah, they were selling you. They were
selling you like diluted drugs basically. But I love that,
even for the bar to be basically subterranean, that they
would still say, Yeah, you're just lack of what do
you say, so what was it self? Re lack of
any semblance of self respect and honor. It's so funny.

(24:57):
So Lorenzo eventually decides to resign, and he writes a
public letter announcing that he's giving up his job. But
he doesn't give a specific reason for why he quit.
He just says, the political events of the past semester
make by resignation mandatory. So you can see just kind
of instinctively like this dude, this dude has what it
is going to have what it takes to succeed in

(25:17):
business or politics.

Speaker 1 (25:20):
Totally from the available information. It kind of seems like
the rest of his time in school goes by without
anything a podcast about shitty people can make content out of.
At least over the time he was there, Frank's interest
veered from engineering and towards economics, a clear sign that
he was going to be a shitty person. He also
started reading biographies of various famous business tycoons, like Andrew Carnegie,

(25:41):
who once sent an army of Pinkerton detectives to launch
a seaborne invasion of a mill occupied by striking workers,
which sparked a massive gun battle, like a twelve hour
gun battle that ended with strikers hucking dynamite into the
Pinkerton boats and rolling a flaming train car at the
barges in the river to break the beachhead. Now we
can assume that when he read about this, Frank made

(26:02):
a note of how violence with nothing but money behind
it didn't work for Carnegie. It was only once he
got the government on his side that he was able
to crush the strike. And this is a thing that
Frank's going to make a note of, right that, like,
you can't just have guys with guns going to break
up strikers, because there's always going to be more strikers
than you have guys with guns. You got to get

(26:23):
the Feds on your back because they always have the
most guns.

Speaker 2 (26:27):
Yeah, and the best toys, and the best toys for sure. Yeah.

Speaker 1 (26:30):
Now, while he was a frat boy, Frank was not
wealthy enough for his parents to pay his tuition. He
had to work odd jobs throughout school, selling ties at
Macy's and at one point driving a Coola truck, which
required him to join the Teamsters union. If he ever
commented on the pay and benefits he received, due to
his union membership. We have no record of it, but
he does have to spend some time as a union man,
which will be relevant in a little bit. Once he

(26:53):
graduated from Columbia, Frank applied to Harvard Business School, where
he wanted to get an MBA. He was a member
of it, the generation of young business executives who had
become what we're called corporate raiders in the seventies and eighties. Right,
This is We've talked about this in our Jack Welsh episodes.
It's kind of period. This transitionary period from like the
sixties to the seventies is sort of the birth of

(27:14):
the ideas that we now just see as like how
capitalism works.

Speaker 2 (27:18):
That like private equity.

Speaker 1 (27:20):
Yeah, private equity company's only responsibilities to a shareholders like
you know, strip mind resources for short term profits, lay
people off, to dig the stock price up so you
guys can get money.

Speaker 2 (27:31):
You know, people died because the business became so poorly
one because we're extracting all the money out of him.
Yeah whatever was fine, fine.

Speaker 1 (27:38):
Yeah, that is kind of the era at least that
he's going to Harvard in is like the guys who
are going to preside over that transition in capitalism are
all kind of in school at the same time.

Speaker 2 (27:48):
Yeah, the guys who are voting twice in college elections
set up an intricate system of shell companies to be
able to dodge any kind of legal liability when people die.

Speaker 1 (27:58):
Yeah, exactly what else you don't want to not dodge
legal liability when people die? Miles think you want to
be like that genius CEO of Ocean Gate, you know,
Stockton Rush dodge all liability by imploding. Yeah.

Speaker 2 (28:11):
Yeah, doesn't this Stockton. I feel like whenever I hear
that name, it sounds like a fucking arena football team.

Speaker 1 (28:16):
Yeah, the Stockton Rushes. Yeah, the Stockton Rushers. I don't
know if there's a Fort Stockton. So yeah, you guys,
you could like pivot off this. You know, it takes
take advantage of the SEO opportunity.

Speaker 2 (28:29):
Makes some weird joke football.

Speaker 1 (28:34):
So where Lorenzo really shined is at social organizations at Harvard.
He's not he doesn't love the classes, you know, he
does well, but like he kind of comes out of
Harvard being like, well that was more or less for
the name, right, like to be able to say, like
I graduated from Harvard, but he does do well running
the Harvard Cafeteria news stand, which is the only store

(28:56):
on the business school campus. He apparently makes bank doing this,
so yeah, might as well start with grifting other Harvard kids.
His first job after at graduation was at TWA, an
airline that at the time was headed by Floyd Hall.
Like the other airline CEOs we talked about, Hall was
a two fisted Army pilot who had fought in World
War Two and then worked for the airline as a

(29:18):
pilot before becoming CEO. Floyd got hired away to Eastern
Airlines right as Lorenzo started working at TWA, which signified
like a new era of management, Like Floyd kind of
leaves TWA and gets replaced by a dude who's not
a pilot, not a war hero. And it's kind of
part of this transition where Americans are starting to see

(29:40):
airlines not as like these kind of symbols of progress
and American greatness, but as like, you know, assets to
be mined for profit. Right it's the business is becoming
more of a normal business. It's losing its kind of prestige.
And I'm gonna quote from Texas Monthly again as a
manager of financial analysis. Lorenzo distinguished himself as a man
who could push past details to the heart of the matter,

(30:03):
but he was too ambitious to patiently work his way
up the corporate ladder. A year later, at twenty six,
he resigned to go into business with a soft spoken
a Harvard classmate from New England, Bob Carney, who worked
for two New York investment houses. The two formed Lorenzo
carnean Company. Although the company at the time was a secretary.
We thought we could make some money in airlines, Carnee recalls.
We had an entrepreneurial burge. Each partner put up one

(30:25):
thousand dollars. Lorenzo Carney was essentially a consulting firm in
search of investment opportunities. So they don't really have a
plan for what their business is going to do. They
just like start a business and like, if we can
just get an airline to pay us for something, we'll
figure it out. So they try a few things they
struggle to get a start, like leasing out planes and shit,
but they're not able to actually like make a profit.

(30:47):
So they spin off from this business that doesn't work
to yet another business, Jet Capital Corporation, and somehow it's
kind of unclear to me exactly how this works, but
like they start a company and I just sort of
like start going around to investors with money in nineteen
sixty nine and going like and then a cool name,
Jet Capital Corporation, Can we have some money?

Speaker 2 (31:10):
Yeah? Yeah, yeah. I didn't want to get in on this. Yeah, yeah,
I wonder was this like the Internet kind of where
enough people kind of knew but probably just weren't savvy enough.
Like they're pretty confident, and they're called Jet Capital Corporation.

Speaker 1 (31:21):
Yeah, it's kind of one of those things, right, And
so they get one point four million dollars and they
don't have really much of a business plan, but they
don't need one. And as soon as they get this
pile of money, Frank, you know, there's some other stuff
they are doing, some consulting, but Frank pretty immediately is like,
that's all small potatoes. What I want to do is
I want to like take this money and use it

(31:41):
as a basis to get more money so we can
just purchase an airline. Now, basically, as he's kind of
like talking this up, he's going around, he's going to parties.
He's able to like make friends with some guys from
Chase Manhattan Bank, and these dudes are eventually like, hey, guys,
you know, we have this this boutique airline in Texas

(32:03):
that's doing really shitty, Like if we can help you,
guys put some money together, you can buy this airline
and try to rescue it and make a bunch of money.
And it's here that I should probably pause to explain
how fucking airlines work in this period of time.

Speaker 2 (32:16):
Because it's weird flying again.

Speaker 1 (32:19):
Like you know, nineteen eighteen is kind of when it
first becomes a business in the United States, because that's
the year the Post Office starts doing air mail routes,
and air mail is like the first big business that
like planes are involved in in the country. US Army
pilots are all of like the people actually flying the routes,

(32:40):
and they established this national system of runways and airfields
that kind of this is what eventually turns into the
airports that are all over the country. It all starts
as like Post Office air mail, like landing strips and shit.
This is all supported by something called the nineteen twenty
five Contract Airmail app. This gives the Post Office the
right to award roots to private carriers, which kind of

(33:01):
creates the private industry for flying and shit. So the
years that follow this are this kind of messy slurry
of these new airlines flighting for routes and the government
struggling to make sure there's places for them to land.
It's really messy. But all four of the major airlines
that dominate the sky today, which are like United, American,
trans World, and Eastern, originate from this period, right, Like,

(33:25):
these are the guys that all of our modern airlines
are basically the big ones at least are basically directly
or kind of indirectly descended from right, come off history, Yeah, exactly.
So passenger service, you're not like flying people, right, because
planes are terrifying death traps, like they can barely take
letters places. But this starts to change by the late
thirties under the watchful eye of Franklin Delano Roosevelt, who

(33:49):
is like, you know, a modern dude, but also pretty
bullish on regulation. So under Roosevelt, in nineteen thirty eight,
Congress passes the Civil Aeronautics Act, which gives regulatory authority
over air travel to something called the Civil Aviation Authority.
And so the Civil Aviation Authority quickly gets a better
acronym called CAB because they change their name to the

(34:11):
Civil Aeronautics Board, and these are this is like the
precursor to the FAA. Right, CAB is like what we
have before the FAA. But while today the FAA basically
just it seems like their job is mostly to make
sure people continue to not die from passenger flights, CAB
has another role, which is to make sure that there's

(34:32):
not competition in the air travel business. Right Like, that's
it's it's kind of this it's very alien to modern
Americans because the government's like, all right, we're gonna have planes.
This is going to be a business, but we don't
want them competing. Right If planes compete, if like airlines
are competing, then like a bunch of ugly shit's gonna happen.

(34:52):
They'll be like fighting for the bottom in order to
be like the cheapest carrier, And like we don't want
it to work that way, right, Like, that doesn't seem
like a good way for planes to work.

Speaker 2 (35:02):
What the kind of parallel reality is this?

Speaker 1 (35:05):
Yeah, it's really strange. It's just like such a different
attitude towards all and part of it's because like the
business is so new, right, there's like a bunch of
government subsidies, like if you're doing certain roots or like
you will get money per flight from the government too,
to kind of help. Because there's this understanding that like,
well just kind of naturally, like a lot of shit's
not going to make sense financially, like flying to a

(35:27):
bunch of different states and shit, there's just not going
to be enough business for it to make sense. So
we want to we want to establish like we want
to establish a network of flights and airlines, and the
only way to do that is if the government kind
of helps these companies out. But if we're going to
help them out, they shouldn't just be you know, making
as much money as possible, right, Like we need to
put in some limitations so so that like it's it

(35:50):
doesn't get as messy as other things have gotten. I
think they're kind of looking at how all the nasty
shit that happens with like trains during like the late
eighteen hundreds, and going, well, we want to avoid some
of that, so cut too, Yeah, cut to today, so
things are good for a while, you get your Second
World War, you know, which means that suddenly there's a
lot of money going into growing the airline fleet, a

(36:12):
lot of it gets pressed into military service, and then
when the war ends, there's all these pilots, these guys
who just like got trained up for free by the government,
and then suddenly like nobody's paying them to incinerate cities
in Asia or Europe, and then they're like, well, I
guess we should find something else to do.

Speaker 2 (36:29):
All right, Oh can I still get drunk while I
do it? Yeah? Yeah, absolutely, No one said you can't
be drunk, you just flying suits?

Speaker 3 (36:37):
Now?

Speaker 2 (36:38):
Oh okay, for sure, man, poor mea martini. Let's go.

Speaker 1 (36:43):
So, because cab was fundamentally pretty anti competitive, it works
out this system with all of the major airlines. So
there's kind of two like types of airlines. There's little
ones where you're just kind of flying within a state,
and the little airlines they're kind of they're a lot
less regulated, right, the pilots aren't considered to be the
same quality of pilots. But it means that like little

(37:06):
airlines can do shit like offer discounted tickets and whatnot,
all this shit that's going to become like standard, whereas
big airlines aren't allowed to do this, right, if you're
flying interstate in international route routes, you like, can't you
just have to kind of like offer one kind of
ticket for a flight, which makes everything simple, Like when

(37:26):
you're booking a plane, you're just like, well, yeah, I
just want like a ticket, you know, to fucking Sarasota
or whatever. But it also means the system is horribly
inefficient because since the big airlines are just kind of
offering one ticket price, you know, for each flight, this
makes it simple, but it means that like if a
flight lifts off for like if like you know, it's
all it's about to be fly day and there's only

(37:48):
thirty percent of the seats on the planet been filled,
they can't stop start offering like cheap seats to try
to fill it up. So it's horribly inefficient. And this
is a big part of why you get every so
off and these like people posting pictures of old planes
being like wow, flying used to be so nice. Why
can't it be that way again? Well, like, part of

(38:08):
why flying was so nice is that barely anyone was
ever on planes, right, like, like, yeah, it was a
lot nicer when nobody was on them, because people suck.

Speaker 2 (38:20):
Yeah, they're just like about, yeah, we have fourteen seats. Yeah,
and it looks like a living room.

Speaker 1 (38:25):
Yeah there are there are five rich dudes on board.
Everybody is completely hammered, like the the like, instead of
getting a single ginger ale, you get like a handle
of gin and a Cuban cigar.

Speaker 2 (38:38):
You know, it was it was nice, right, It's like,
do you have seat belts? They're like, what are you
a priest? This is laudanum. Take all the laudanum you want.

Speaker 1 (38:47):
Yeah, what the fuck is this? Our pilot made some
bathtub heroine. Everybody chill out. It's gonna be choppy.

Speaker 3 (38:55):
No.

Speaker 1 (38:56):
So a big part of like why flying is nice
is that, like most people aren't able to do it.
In nineteen sixty five, which is when Frank gets hired
by TSA, only about twenty percent a little less of
the US population had ever been on an aircraft, right,
And so in sixty five, less than twenty percent of
the country's ever even been on a plane. By the
year two thousand, half of the US population flies at

(39:18):
least once a year. So wow, And basically everyone who
gets to adulthood is on a plane at least once right,
very rarely. Yeah, it's just like life now. So the
other thing that's happening, right is the seventies dawn is
this generation of nbas who are Lorenzo's peers, are all
starting to reach high positions in their field. So a
lot of these guys are again the first of what

(39:39):
we now call corporate raiders. The best touchdown of this
if you watch the movie Hook, that's who Robin Wilson's
character is supposed to be, right Like, he's this or not.
Robin will Jesus Christ, Robin Williams, Robin Williams, I didn't
sleep last night. Robin Williams is supposed to be a
corporate raider, right like, he's a yeah, he's like this

(40:02):
guy whose job is to buy up companies and then
like strip them for assets. You know, he's a pirate,
right Like, that's the point of the Yeah. So to
give you an idea of the kind of men that
Lorenzo called colleagues and what they're doing to the rest
of American capitalism in this period of time, I want
to read a quote from a summary of the book
Corporate Raiders and their Minions by John where Close. Quote

(40:25):
the raiders who Close describes are colorful, to say the least.
Among them, there's Robert Campo, who sought to maintain his
youth with injections of fetal lambraine cells, and who's blitz
creak across the department store sector of the North American
American economy ended with the bankruptcy of Federated department stores
in nineteen ninety. Carl Icon, who supposedly said if you

(40:45):
want love, buy a dog and gutted twa, and Robert Maxwell,
who overpaid for McMillan, contributing to the collapse of his
media empire and leading to his suicide by sea. Thanks
to these characters, companies can't coast anymore. Close likens the
Raiders effect to the West Indian slavery bolts in the
eighteen hundreds, saying the new M and A transformed public

(41:07):
corporations the establishment's repositories of power and wealth into very public,
very visible, very vulnerable sugar plantations, open to all with
the will, the intelligence, and sometimes the personality disorders needed
to gain entry. The corporate raiders, explains Close. They're also
the ancestors of today's shareholder activists. They don't buy underperforming
companies they buy into them and force their managers to

(41:29):
up their game. So they're all crazy assholes, right, Like
that's who gets these jobs?

Speaker 2 (41:35):
Feeding sambrain cell in jails. Yes, is like some fucking
Peter deal shit, Like what the fuck is this?

Speaker 1 (41:44):
When you read about these guys, it does make it
clear that, like, oh, a huge part of like the
massive PR blitz to make the tech industry feel like
something special was just to briefly convince people that these
guys weren't the same as it ever was, right that
like all of these secheads were just like no, there's
who could code? Yeah, exactly, some of them can't even code,

(42:08):
you know, they're just injecting fetal lambrin And I wish
more of them would would do the suicide by sea thing.

Speaker 2 (42:15):
Also, what's what does that mean? Is that like a
is that a specific way.

Speaker 1 (42:19):
Or yeah, going out on your yacht to jump off
or something.

Speaker 2 (42:24):
Yeah, let's let's let's look up Robert Maxwell. Let's do
the research. I should I wonder yeah, or it's like
or is it like a thing where you wear like
a meat suit and then you jump into like shark
infested waters and like just let the sea do itself.

Speaker 1 (42:35):
Oh, man, this guy looks like ship. Look at this dude.
Holy fuck, Sophie Google Robert Maxwell? What a monster? Oh
this is Gillan Maxwell's dad. Yes, I have heard of this. Yeah,
he dies mysteriously at sea and there's probably something to
do with the aside.

Speaker 2 (42:52):
Yeah, this is killing Maxwell's dad. Look at this fucking weirdo.
Oh my god. Hell yes, those eyebrows.

Speaker 1 (42:59):
We'll do an episode on this guy at some point.
He's dressed like Tucker Carlson, but he looks like if
Tucker Carlson melted in the sun.

Speaker 2 (43:08):
Or him, and like John Taffer from bar Rescue became
one guy.

Speaker 1 (43:13):
He does have the look of like a fucking Paul Verhoven,
like secondary bad guy.

Speaker 2 (43:19):
It's so funny.

Speaker 1 (43:21):
Anyway, let's all think about Gilan Maxwell. I guess I
don't know whatever. Here's ads.

Speaker 4 (43:34):
What a wow looking person.

Speaker 2 (43:36):
First of all, yeah, it does look like shit. He
looks karma. It looks like.

Speaker 4 (43:42):
When a potato starts to get moldy and sprouts. That's
what it looks like.

Speaker 2 (43:47):
Yeah.

Speaker 1 (43:48):
Ah, we're back and we're talking about Robert Maxwell. What
a what a what a weird asshole? So these corporate raiders,
these guys who like are are Lorenzo's peers. Sometimes what
they're doing is they're finding lazy, underperforming companies that have
like a lot of useless positions and have wasted it
basically coasted during the years when the American economy was

(44:11):
like a freebie, right, the rest of the world was
destroyed by war, and we just like you could do
anything as a business guy and make money. But that's
starting to end by the seventies, right, So some of
these guys are just like finding companies that were not
set up well and ending inefficiencies. But a lot of
them are just like gutting good businesses for short term gains.

(44:31):
A good modern example of this would be what happened
to the company that makes instant pots. They merged with
the maker of pyres in twenty nineteen, right before a
giant sales spurt due to the pandemic, but since that
growth wasn't sustainable, like, especially since instant pots, you don't
have to like buy instant pots, yea every author, Yeah, right,
So if corporations functioned in anything that resembled like a rational,

(44:54):
healthy manner, this would be fine, right, You'd be like, well,
we had that nice year or two where we made
a bunch of extra money and now we can you
are a nice, steady business. But because capitalism has been
you know, particularly because of like the kind of these
corporate raidar dudes are the guys who run everything. Now,
what they do as soon as there's this big like
windfall is they take on a four hundred and fifty

(45:15):
million dollar loan and they kind of justify this by saying, oh,
we got to build new production facilities, we got to
pay for R and D on a new product. But
that's not what they do. And I'm going to quote
from Crane's Chicago Business newsletter next. That debt refinanced two
hundred and ninety four million in existing debt, including one
hundred million tied to the twenty nineteen acquisition, and helped

(45:37):
support a two hundred and forty five million dollar dive
it into shareholders. Essentially, none of the debts supported investment
in the business. So basically, the good luck of the
pandemic year let them con their way into getting half
a billion dollars of debt they were never going to
be able to pay off, most of which they gave themselves.

Speaker 2 (45:55):
Yeah, exactly. Yeah, it's like all that shit. Like even
we were just talking on on aley'zeitg. So this guy
who talks about like private equity and how Yeah, another
way they do it is like when they buy these businesses,
they'll force these companies they take over to sell all
of their property to the private equity firm and then
begin leasing it back to them so they can immediately

(46:15):
start seeing a profit.

Speaker 1 (46:16):
And you're like, that's not really business, You're just running
a con yeah, which is.

Speaker 2 (46:22):
You're just yeah, you're sucking it dry from the inside. Yeah.

Speaker 1 (46:25):
So back to Frank, he and his business partner have
managed to get together the money to buy a Houston
based carrier called Texas International Airlines. A lot of that
money comes from Chase Manhattan. Texas International air is a small,
tottering local kind of local. It was basically in terms
of its size, it was a local Texas airline, but

(46:45):
because it does one flight to Mexico, it's an international,
which means it's regulated by CAB, which like fucks it over. Actually,
because they can't do a lot of the shit smaller
airlines they're able to do to kind of like make
a profit. It was nicknamed Teeter Airlines, which is because like,
it's such a like the flights are so shitty, Like
they have trash planes, they have the worst pilots. It's

(47:08):
just not great. In the last five years, the company
had lost twenty million dollars over expanding its fleet and
taking on debt. It was a long shot that Lorenzo
would be able to write the ship once he bought
the company, but Chase Manhattan had faith in him, and
he was medically incapable of doubting himself. So there's a
shareholders meeting in August of nineteen seventy two where Lorenzo

(47:29):
gets elected president and CEO of Texas International air This
makes him the youngest airline president in history. That'szy. He's
thirty two, so that is pretty young to be running
an airline. A couple other cool things happened that year
for him. He gets his pilot's license. He marries this
lady who had been like a legal assistant and was

(47:52):
the daughter of a wealthy Florida real estate mogul. Also
around the same time, his brother, who had been a
stock broker, dies of heart failure. His brother's like forty three,
which convinces Frank to become a marathon runner. Tragic if
only he had just continued to be very unhealthy and

(48:12):
do cocaine. We need, like, you know how they have
like campaigns and some vulnerable areas to like have people like,
oh there's a lot of heart disease in this in
this neighborhood or whatever. We should like do these ads
trying to keep people away from fast food. We need
to have the opposite for like Harvard grads, We're like, you.

Speaker 2 (48:31):
Ever tried cocaine? You ever just done like a shitload
of cocine.

Speaker 1 (48:34):
Mix that stuff with downers too, Like, just grind your
valum up with your blow.

Speaker 2 (48:39):
You're good man. The best thing to do is probably
smoke like three grams of meth and then just take
a bunch of benzos man to go to sleep. Yeah,
benze a, you're gonna feel like Superman, dude. That's how
fucking That's how like Leah Coca used to do it. Dude, Like,
if you're trying to get like next level with it,
that's how you got to do it, dude. Yeah, split
your heart in two directions.

Speaker 1 (49:00):
We need to pay a new generation of influenzas to
spit pitch speedballs at business guys. So under the rule
of the Civil Air Board. Truly local airlines are again
subject to like fewer of these anti competitive regulations, and
so they can do stuff like offer discount last minute fairs.

(49:21):
Because TI is in this awkward position, they can't really
do that, and they're up against their big competitors are Southwest,
which is a small local airline, and so it's got
more room to maneuver and bran if so, Lorenzo succeeds
in kind of sliding in between these these two competitors
and he's able to like pull together some profitability. He's
actually pretty good at this aspect of the business. He

(49:43):
drops markets that weren't profitable, in flights that had a
poor return. He fires a bunch of employees in order
to cut payroll into something manageable. And in nineteen seventy three,
the year after he takes over TI, Texas International posts
its first profit in like five or six years. He'd
made a lot of big promises to his employees that like,

(50:04):
once the company was back in the black, he'd ensure
that they got rewards for all the hard work they
did to get TIA back into good health. But as
soon as they start making a profit, he's like, oh, no,
I didn't mean that you guys are getting any more money.

Speaker 2 (50:16):
Absolutely, I say that. No, that was a lie. See
you want to get fired for fucking lying? Yeah, okay,
then shut up. I never said I would never say
some shit like that.

Speaker 1 (50:28):
So obviously people are not happy. So the ground workers Union,
which is like, you know, the guys, it's pretty it
should be obvious what the groundworkers Union is for planes.
They're the guys on the ground doing shit. They start
agitating and in December of seventy four they decide to
go on strike. So airline workers are at this point
the most some of the most powerful unionized people in

(50:50):
the country. And when the airline workers would go on strike,
the only kind of way, you know. Again, so when
you've got a strike, right, a company that's going to
engage in strike breaking is probably going to bring in scabs.
And scabs, it's understood always do like a shittier version
of the job that regular employees do. And you know,
when it comes to people like that's a problem with

(51:11):
air travel.

Speaker 2 (51:12):
Right.

Speaker 1 (51:12):
So if you've got like a coal mine and you
bring in scabs, the scabs are going to make you
less money. Maybe they're a little more likely to die.
But like, if you get a bunch of scabs killed
in a coal mine, the coal miners aren't going to
have that big an issue with it because they hate
the scabs, and no one else is really going to
care because it's just shit happening in the coal mine.
Whereas if you bring a bunch of scabs in to

(51:32):
the air industry and a plane crashes.

Speaker 2 (51:35):
A lot of people might get angry at you.

Speaker 1 (51:37):
You know, So you you have as a company in
this period, you have like less options for kind of
fucking over your unionized employees because it's it's air travel.

Speaker 2 (51:48):
You know. You also have to Yeah, what's that pool
of people. I can only imagine when you're like, all
right now the bottom of the barrel for airline.

Speaker 1 (51:57):
Workers, illegal plane fuelers, and ship Yeah, they're probably not
great at the.

Speaker 2 (52:01):
Yeah I could do that, Yeah very Yeah I filled
up my car. Yeah, I basically do the thing that's
the precursor to stealing catalytic converters in your modern times.

Speaker 1 (52:14):
Yeah. So they also airlines also, if they're fighting a strike,
have to contend with the fact that, you know, because
running an airline is more expensive than most things. If
you're keeping planes grounded, and you're like canceling flights. It's
like slightly less expensive to do that than it is,

(52:34):
just like set fire to piles of money, you know,
like you are, you are burning so much cash whenever
you're you're knocked down by a strike. So for years,
the way airlines would handle strike threats is to just
pretty much, very quickly concede to the union right to
give them at least some of what they wanted and
get folks.

Speaker 2 (52:51):
Back to work. It was nearly always worth it.

Speaker 1 (52:53):
But Frank Lorenzo hates unions, and he's like, I don't know,
why the fuck are we going to concede to these fuckers?

Speaker 2 (53:00):
Fuck them?

Speaker 1 (53:02):
So depending on who you ask, he's either kind of
just too proud, right, like he'll burn his airline to
the ground rather than lose face to a bunch of strikers,
or he's like a calculated risk taker and he's like,
you know, doing the math and figuring out, ah, well,
you know we can hold out this much longer, and
you know these workers can only hold out this long,
and this is like a I'm not really sure which

(53:23):
version of Frank Lorenzo is more accurate. Probably a little
bit of a and a little bit of b right. So,
for four and a half months after the groundworkers union
votes to strike, no TI plane flies they like, they
shut down traffic entirely. He furloughs the entire workforce pretty much.
Executive salaries are cut to the bone, and eventually, through

(53:44):
this grinding battle of attrition, he manages to pull out
a victory. And the only reason Frank is able to
survive is that when the other airlines see him actually
going to war with like one of his big unions,
they put together eleven million dollars and strike aid. Like
other airlines are giving him money to be like here
you go, buddy, like keep up the good fight, right yeah, yeah, yeah,

(54:06):
welcome over.

Speaker 2 (54:07):
Yeah.

Speaker 1 (54:08):
Unions do the same thing, right, Like, it's just this
is like an owner's union, right, it's good.

Speaker 2 (54:13):
Fucking grim man, Yeah it is. We love what you're doing, man,
just vaporizing fucking will to fuck disguis. We've got you. Yeah,
it's it's pretty cool.

Speaker 1 (54:24):
Like. Um. So, the union comes to the table and
it ends the strike with very minor concessions from TI
and Lorenzo is now a hero of the capitalist class.
He is not only this kind of like daring corporate
raider type guy who brought his company to profitability by cutting.

Speaker 2 (54:39):
It to the bone.

Speaker 1 (54:40):
But when his selfish workers put his success at risk,
he had like gone to war with them and won.
In an interview he gave not long after the settlement,
he told a reporter, the groundworkers union has demonstrated little
concern for the well being of any of us, for
that of any of our cities, and of course for
the company, which must somehow pay the bill. By nineteen

(55:01):
seventy six, TI was making more than three million dollars
in net profits. It was now healthier than ever, but
still too small for Lorenzo's liking. He knew that he
was going to need to introduce a major innovation to
make his companies stand out from the pack. Here's how
Texas Monthly describes what happened next. If TI was to survive,
Lorenzo had to find a way to beat Southwest's low fares.

(55:23):
Prohibited from discounting regular fares, TI had experimented with reductions
on largely unregulated stand by tickets. The airline had, for instance,
promoted a new route from Houston's Hobby Field to Dallas
Fort Worth Airfield, by offering stand by fares keyed to
the day of the month, one dollar for travel on
August first, six dollars for travel on August sixth, and
so on. Searching for a steady way to fill those

(55:44):
empty seats, the company came up with peanut fares, in
which the passengers could lock into cheap fares on certain
flights with light passenger loads. This is the birth of
the modern system we have of like, oh, you got
the super saver seats, and you've got like the extra economy,
and you've got like the economy plus.

Speaker 4 (56:02):
Let you know, yea, this is where that all begins.
This is so triggering to like airport misery.

Speaker 1 (56:08):
Yeah really yeah, this is like the start of a
lot of that, and it is. It's a mixed bag, right,
Like this is a good idea. It works really well financially,
it's also more efficient, but it's against cab regulations, and
so Lorenzo has to lobby the agency to make his
peanut faars legal and he succeeds. In January nineteen seventy seven,

(56:31):
TI gets granted a one year trial to like attempt
to do these new kinds of fairs, and it works
really well, Like TI passenger loads on a lot of
flights go from like thirty or forty percent to ninety
percent or more.

Speaker 2 (56:45):
Booh yeah.

Speaker 1 (56:46):
And it's it's one of those things where like Branef
starts complaining because this starts eating into their business. And
TI they're like TIS advertising, you know that all of
their seats are discounted and they aren't. And the agency
like there's some minor rules against Lorenzo, but it doesn't
actually stop him from like basically doing this shit. And
the idea as soon as like he introduces these new

(57:08):
kinds of like discounted fares and gets away with it,
it starts spreading like wildfire throughout the rest of the industry.
And I'll say this, what Frank does here is more
of a mixed bag than we tend to get with
our like corporate bastards. There's a decent argument that Frank's
innovation here it leads to a huge drop in pricing
for consumers across the market, and that this is a

(57:31):
big part of what opens air travel up to groups
of people who would never have been able to afford
to fly recreationally. Like frequent flyers hate this because frequent
flyer the only people who can afford to be frequent
flyers in this period are either independently wealthy or their
corporate flyers whose companies are paying for the expensive seats,
and they love that the planes are empty and nice,

(57:51):
but like.

Speaker 2 (57:52):
Now the barbarian hordes are fucking there.

Speaker 1 (57:55):
Yeah, exactly, the poor have taken to the skies. You
get all so argue that, like, well, this is a
lot less wasteful and shitty for the environment than flying
in planes that are seventy percent in empty. Obviously, the
fact that this causes air travel to explode has a
net horrible increase on like, you know, carbon emissions and shit.
I don't think you could really morally put that on

(58:17):
Frank because he's not He doesn't.

Speaker 2 (58:18):
I don't think he knows much about it. He's not
like any Exxon exec. He doesn't. Yeah, he's any technology,
it becomes inevitable, like it's your equity, right, Like, yeah,
it was always going to get cheaper and eventually would
get to a place where other people could fly. Yeah.

Speaker 1 (58:31):
So at the same time he's doing this, a national
movement has kind of coalesced around the idea of deregulating airlines.
As I mentioned, earlier this the business of big time
air travel was deliberately not a competitive industry in the US,
and the same way at least that most businesses were competitive.
The sheer expense and the fact that these companies received
government subsidies, you know, had allowed kind of air travel

(58:55):
to get off the ground. But now that we're in
kind of the seventies and stuff the late seventies in particular,
a lot of these old airlines are kind of hemorrhaging money,
and this makes a pretty good case that deregulation is necessary.
The cause was opposed actually by the business a lot
of the guys that Frank considered peers, and it was
also generally opposed from owners of airlines because they're like, well,

(59:17):
you know, there's shit that's fucked up about the business,
but we understand it the way it is, and if
you like deregulate, then we're going to have a bunch
of competition, and a lot of our airlines are going
to die if we won't be getting subsidies, and shit,
we're not going to be able to make this stuff work.
But this kind of alliance of free market right wing
economists and liberal democrats get together and agree on deregulating

(59:40):
the air, and like democrats like it because cheap flights
will be good for the economy, and like it'll open
up air travel to working people, and the free market
guys like it because that's what they fucking do. And
I'm going to quote from a contemporary article in the
New York Times here writing about deregulation of the air.
Equally compelling was the sense of inanity associated with so
many empty seats. In nineteen seventy three, airplanes were flying

(01:00:02):
from New York to Los Angeles with thirty seven percent
of their seats filled, says Stephen Bryer, then a lawyer
on Kennedy's staff and now a federal judge. This assured
the business flyer of an empty seat on which to
place his briefcase. But look at how high the fare
had to be in order to make this possible. What
was really going on was that the briefcase was paying
full fare. The expense accounts said, many of them Republican businessmen,

(01:00:24):
who might otherwise have found government economic controls anathema. Loved
federal airline regulation. Service was attentive, delays were rare, planes
and airports were uncrowded. So what affairs were high the
company picked up the tab. An unusual coalition of free
market economists and liberal Democrats fought to loosen the reins
on airlines. As Brier puts it, the outcome was going
to favor the typical middle class individual. It would be

(01:00:47):
very different from the subsequent deregulation of the telephone service,
he says, in which the outcome favored business customers at
the expense of the residential customer. Despite practically unanimous opposition
from airline executives, deregulation was signed into law by President
Jimmy Carter in nineteen seventy eight.

Speaker 2 (01:01:03):
MM.

Speaker 1 (01:01:04):
Yeah, now, this is not going to entirely work the
way they want it to, right, there's as we all know,
as we're all living through. But it does make air
travel a lot cheaper initially. Now we'll talk later about
kind of where things go from there, but it does
to some extent work the way they want it to.

(01:01:26):
So Frank Lorenzo was initially frightened by deregulation because he
doesn't know how this is going to work, But once
it becomes clear that this is happening, he starts looking
for ways to make it work for him. A lot
of guys are doing that at the time, and one
of them is a dude called Donald Burr. He's the
founder of People's Express, which is like one of the
first big budget airlines. You might think of it as

(01:01:47):
like Spirit or Frontier, and kind of the big thing
for People's Express is that it's a no frills airline.
There's no luxury at all, and every seat on the
plane has the same low cost point, right, And his
plan is to it's this weird hybrid of shit because
he's Burr is like, we're going to keep costs low
by cutting out luxuries and also not using union labor.

(01:02:08):
But also in order to kind of compensate for that,
Burr is like, all of our employees will get stock
in the company. That's why it's People's Express, like where
all everyone like owns a part of the company. It's
it's an interesting vision. You don't really have stuff like
this that much anymore, is it.

Speaker 2 (01:02:24):
Like, so it was legitimately like worker owned airline to
an extent, like they had like forty eight percent of
the tame.

Speaker 1 (01:02:32):
Yeah, they're not going to actually be in control and
this doesn't work out in the long run. Although this
does I think become frontier, like that is kind of
where it anyway, whatever, that's the idea that Burr has.
Now Lorenzo sees this, this plan by Burr as fundamentally flawed. First,
fuck giving workers stock. But more to the point, he
knows that rich people are always going to want to

(01:02:52):
pay more for a nice flying experience. And Lorenzo's like,
you know what, it might actually be worth even more
to rich people to pay for an ice flight if
they get to watch columns of poor people file passed
and cram themselves into like a cattle pin, right, Like,
we might actually be able to make more money on
rich people if they get to see poor people.

Speaker 2 (01:03:11):
Having a worse style. Of course, Yeah, we've reinforced the
class structure.

Speaker 1 (01:03:14):
Yeah, that's going to make these folks thrilled. Here's the
New York Times. The wave of the future, Lorenzo insisted,
was a flexible pricing system with a wide variety of
fairs and services tailored to different tastes and pocketbooks. Such
a system, enforced today, with some passengers paying five hundred
dollars seated next to others paying one hundred and fifty,
makes it possible to extract a premium from the business

(01:03:35):
flyer while simultaneously offering bargains that entice the discretionary traveler.
In Lorenzo's terms, it creates travel. In nineteen eighty, Burr
left Texas International to start People Express, taking with him
Gerald L. Gittner, the marketing vice president, and several other executives.
That same year, Lorenzo established Texas Air as a holding
company for Texas International, a symbol of his expansive intentions

(01:03:57):
and expand he did. His first move was the creation
of a low fair carrier, New York Air. Lorenzo initially
set about wooing business flyers in the Boston, New York
Washington shuttle market, monopolized by Eastern airlines. New York Air
usually charged less than Eastern, but offered more in the
way of reserve seats, snacks, and beverages, an enthusiastic service.
The non union employees earned less than their counterparts at

(01:04:17):
other airlines. So like, you know, he's he's he's doing
this mix of cutting shit to the bone and making
sure there's special options for people who are willing to
like pay banks, so that rich people can like you know,
have a reason to be on flights too. And this
this winds up being a lot smarter than like this
kind of like weirdly sort of communist plan that Burris

(01:04:39):
pushing where everyone has the same seat, and it's just
it's more financially successful. So you know, as this is
all going on, the seventies are drawing to a close,
the Reagan eighties are starting up. Everything's coming up. Frank
Lorenzo unions are taking hits left and right. He's making
more money than ever. Cocaine is flowing like wine, and

(01:04:59):
it was time for another bold move. He was going
to take over the grand dam of the sky. Continental
Airlines like and Continental is back in the day. So
today United Airlines uses their like logo and livery right.
Continental back in the day is like when you see

(01:05:19):
like pictures of really nice flights, it's often Continental. They
are the fucking Gucci airline. Like this is the nice shit, right,
this is Robert Six's airline.

Speaker 2 (01:05:30):
Yeah it is.

Speaker 1 (01:05:30):
It is like the fanciest airline out there, but it's
hemorrhaging money. And fucking Frank Lorenzo is like, I'm gonna
buy this motherfucker and I'm gonna gut it, and we
are going to talk about that and how he kind
of kills a lot of aspects of the way unions
had worked and the labor, like labor had successfully like

(01:05:52):
fought for shit, Like he goes to war with these people,
and it's a pretty nuts experience. But that's all in
part two for right now. What I want to talk about, Miles,
is your fucking pluggables. How are they doing?

Speaker 2 (01:06:04):
Oh, they're good. You can plug them in, you can
unplug them. Check out the Daily Zeitgeist or four or
Miles and Jack on Mad boostis that's trash TV, basketball
and daily news, whichever one you want. Hell yeah, So
there you go.

Speaker 1 (01:06:20):
And you can also get this podcast without ads at
cooler Zone Media if you mail Sophie, I don't know money,
probably this is.

Speaker 4 (01:06:32):
And we we at cool Zone Media have a new
show with Jake Canrahan.

Speaker 3 (01:06:35):
It's called sad Oligarc. It's fantastic on all the apps,
including cooler Zone Media.

Speaker 1 (01:06:42):
Yeah, where you'll get it without without ads. So you
want to have to hear about the Reagan coin, uh,
which which fits in well with today's topic.

Speaker 4 (01:06:50):
It really does. That's another fucking episode. Behind the Bastards
is a production of cool Zone Media. For more from
cool Zone, visit our website coolzonemedia dot com, or check
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