Hard Landing (40 page)

That was it. The
Braniff II rates would be applied at the resurrected Continental. Cockpit captains, previously paid close to $90,000—men who may have entered into alimony settlements or investment partnerships based on the expectation that a contract was a contract—would be invited back to work at $43,000 a year, if they happened to be among the lucky. Flight attendants making $35,700—women who had entered into mortgages and who had car payments and who had enrolled their children in parochial schools, perhaps, on the same expectation—would have to adjust to $15,000. Top mechanics, their fate already handed to them when they walked off the job the previous month, would, if invited back to work, receive $20,800 instead of $33,280. Bakes was marshaling the arguments he would present to the bankruptcy court: if this didn’t seem fair, it was because years of government regulation had coddled these employees and punished the consumers of the nation. Bankruptcy, Bakes would tell the court, was the only way to redress this imbalance in accordance with the wishes of Congress and the forces of the marketplace.

As the press conference grew closer, Bakes and Lorenzo feverishly contemplated their other rebuilding moves. Where would Continental, once reborn, fly? It obviously could not resume its full schedule of service to 78 cities. But maybe, just maybe, it could get back in the air quickly with service to two dozen or so of its most important destinations.

What fare would it charge? It had to be low, Bakes believed, a “
blow-your-mind number.” It had to be lower than Southwest’s fares and it certainly had to be lower than People Express’s. Whether the fare was profitable by any conventional method of accounting didn’t remotely matter at this point: Continental no longer owed anyone a dime. The fare had to be low enough to get blood back in the arteries of Continental. The decision was $49, to anywhere.

When would they resume flying? How about Tuesday? Launching an airline on that schedule was a ridiculous goal, this being Saturday. But it was part of the imperative for momentum—to get off the ground fast. Tuesday it was.

Bakes reviewed a draft copy of the news release that would be distributed
to the press already assembling a short distance away. Before each appearance of the name “Continental” Bakes
inserted “The New,” as in “The New Continental.” It was hokey, he realized, but he was already launched on another campaign, another attempt at the near-impossible, partly for the sake of seeing whether it could be done. If Continental had a chance to make it in the marketplace, it had to position itself as something radical and new. Bakes did not want people looking on Continental as the “Proud Bird” of yore, struggling to regain a fraction of its former glory. He wanted people to look on it as a small airline expanding from a small base, an airline with a great future, not simply a great past.

Before long Lorenzo and Bakes made the short drive along Buffalo Bayou to the Allen Park Inn, a glorified roadside motel, where they released to the world the news of the New Continental, and to Continental employees the news of what had just happened to them and to their jobs. When they returned to their offices, Lorenzo was
deeply depressed. It dawned on him that no matter how ingenious a business strategy, the bankruptcy filing was an
admission of failure—the failure to persuade employees and lenders to come to terms voluntarily. Even for someone of Lorenzo’s commitment to the means that justified the ends, it was not a happy feeling. Lorenzo suddenly struck Bakes as burned-out and dejected.

The following day, Continental’s top officers would be summoned to headquarters for the grim task of deciding which operations and which people would be eliminated. “
It’s your baby,” Lorenzo told Bakes.

Lorenzo did not, as critics came to believe, slash and burn with relish. What he did was, if anything, even lower. He walked away and let someone else do it for him.

The officers of Continental Airlines assembled in the boardroom, capable journeymen, for the most part, with decades in aviation behind them. Bakes—37 years old, a lawyer with three years’ experience in the airline industry was awed by the experience arrayed before him. There were men like Dick Murray, who went all the way back to Mohawk Airlines in upstate New York, where he had helped refine the first computer reservation system in the airline industry, earlier even than American’s Sabre; who had helped to build Bob
Crandall’s Sabre into one of the world’s most sophisticated marketing tools; and who had come to work for Lorenzo to begin accomplishing the same for him. As Bakes looked at the long faces of Murray and the others, he wondered for a moment whether he could really do this: order each of them to eliminate two thirds of his operation, two thirds of his budget, two thirds of his people or more. Bakes realized he couldn’t trust himself to negotiate the nitty-gritty of it. This exercise, he suddenly realized, was painful enough without having to hear about individual cases of hardship or need and to arbitrate the close calls. So he assumed the bearing of a dictator.
Just cut, he told the assembled managers. “You do it or I’ll do it for you.”

The older and wiser men shook their heads.

“We’ve been through a merger,” Bakes reminded them. “We’ve been through a strike.
You
got us through it. You can do this too.”

The men left, soon to begin returning one at a time, with their lists. Hour by hour, department by department, the red lines went through the payroll lists. About 8
P.M.
Dick Murray came in,
protesting the arbitrariness of Bakes’s order. Murray carried a ream of computer printouts showing that his people, the reservation people, added revenue to the company rather than draining it. Bakes refused to listen.

“Give me your roster!” Bakes bellowed. And through one name after another he indiscriminately draw lines, then shoved the list back to Murray. “Here,” Bakes said. “Here’s your plan!”

“If that’s the way you want it,” Murray said, walking out. And Bakes had no idea whether he would ever see Lorenzo’s computer man again.

In Newark news of Continental’s Chapter 11 reached Donald Burr, who,
instantly joyous, scheduled a party to celebrate. Lorenzo’s tumble into the abyss of bankruptcy tingled the Calvinist core of Donald Calvin Burr. Burr had long told people that “what Frank sows he will reap.” Now Burr said, “He’s gotten what he deserved!”

On top of the thrill of seeing justice done, Burr felt he could claim much of the credit for the victory. Those ultralow fares on the Continental bread-and-butter route from Houston to New York—they had pushed Frank over the edge. “We took credit,” Burr later said.

Burr, more expansion-minded than ever, began recruiting pilots
among the victims of Continental’s Chapter 11, emphasizing that by taking a job with People Express, they could cast their lot with the
forces of good—and go to war against Frank Lorenzo.

The great plan for the New Continental quickly encountered an unlikely obstacle. As Bakes cried in a meeting, “What if we
don’t have enough fucking pilots?”

Just before the intended relaunching, Bakes began picking up rumblings that the pilots might actually strike. A strike against a bankrupt airline—nobody had even thought to worry about it, it seemed such a non sequitur. But the pilots and the flight attendants were preparing for one just the same. And although union pilots regularly crossed the picket lines of other airline unions, their own picket lines were sacrosanct. A scab pilot—there had been very few in the history of the Air Line Pilots Association—marked himself as a professional pariah. “The
vilest enemy of the morale of aeronautics,” David Behncke, the founder of ALPA, had declared, “is a scab.”

Fortunately for Bakes a surfeit of pilots was on the market, the result of route cutbacks by the major airlines in the recessionary years following deregulation. Bakes established a phone bank to begin recruiting replacement pilots, one by one. It was not an easy task. When a recruiter found a willing pilot, a
cheer went up in the room.

By Tuesday morning, just three days after the bankruptcy filing, Continental had just barely enough pilots to get aloft on Bakes’s schedule. Anyone who thought that people would never fly a bankrupt airline got an instant lesson in consumer elasticity: passengers were lining up
50 deep in Houston for Continental’s $49 fares. But the unwillingness of Continental’s pilots to accept positions with the New Continental quickly began to crimp Bakes’s rebuilding plan. The press began a deathwatch. “The
threat of a strike,” said
The Wall Street Journal
, “might be enough to doom the airline’s attempts to reorganize and survive.”

Bakes refused to give the press any ammunition with which to speculate. He
instructed the company’s principal spokesman, Bruce Hicks, to attribute canceled flights to mechanical delays rather than to the lack of pilots. “Tell them anything,” Bakes barked. Regardless of what the truth was, Bakes said, “we’re
not
cutting our schedule.”

The days passed with a few more flights here and there but still too few pilots. Two of Continental’s operating executives approached Bakes with a reduced schedule. “We’re out of pilots,” one of the schedulers glumly reported.

Bakes’s jaw went tight. “We’re not going to announce any cutbacks!” he shouted at the schedulers. One by one more pilots were drawn in, although in a number of cases they were put to work before they had received the
requisite training in Continental’s aircraft. Anonymous callers harassed the strikebreakers at home and on the road, particularly at night, when they were trying to sleep between flights. Bakes instructed scabs to register in hotel rooms under fictitious corporate names, and each night Bakes and his aides, and finally Lorenzo himself, telephoned the pilots to offer encouragement.

The inchoate Continental wasn’t a pretty sight, but it worked. After weeks of fits and starts, it was aloft, apparently for good. And Phil Bakes, at long last, was made Continental’s president.

A few weeks into Chapter 11 hundreds of Continental and former Texas International pilots crowded into a hotel meeting room near Intercontinental Airport in Houston. Larry Baxter, the head of the union at Continental, took the podium.

Baxter struck many as a somewhat
peculiar individual. He had a habit of darting from subject to subject in midsentence—“kind of
like wind shear,” another ALPA leader would later comment. Baxter often seemed to look past the person he was talking to. In the maelstrom of the Continental bankruptcy his eccentricity was in full bloom.

“Everything will be all right,” he assured the confused and angry pilot group. Baxter explained that he had been having a recurring dream in which a herd of cattle were charging toward him, their heads lowered. Then, in his dream, guitar music filled the air, and the animals slowed, and soon they were milling peacefully about him … and the man playing the guitar was Frank Lorenzo. The Continental pilots could not believe the bizarre words passing from the mouth of their leader. Something like 50 pilots at that moment rose from their chairs, walked out of the meeting, and decided to cross the picket lines, returning to work for Bakes and Lorenzo.

A few days later Baxter was in Washington for a union strategy
session. He was convinced that Frank Lorenzo was nearby, and he wasn’t playing a guitar this time. Baxter said Lorenzo was out to kill him. Soon Baxter was recalled from office.

Into the job came Dennis Higgins, the former Texas International pilot. Under him the pilots’ union fought back gamely—in court, where it was convinced it could reverse the abrogation of its contracts, and in the corridors of Houston Intercontinental Airport, where striking pilots paraded with placards trying to discourage strikebreakers from flying. The picketing pilots received extensive written instructions for use in conversations with scab pilots: “Use
Frank’s past lies against him.… Ask what the future under Frank will be like.… How can they now believe him after all the lies and half-truths? … Convince them we want to rebuild a profitable company as much as he does.… We all want to fly.… Under Lorenzo, Continental will ultimately fail.”

But everything went against the striking pilots, even under their newly invigorated leadership. The early court cases, in which the pilots tried to reverse the bankruptcy filing as an act of bad faith, were discouraging; the litigation would drag on for years. Over the months more and more pilots crossed the picket lines. Picket duty became a pathetic, solitary sojourn by downcast, out-of-work pilots, holding out on principle, silently walking up and down the airport hallways in uniform as passengers clambered past them to fly on the ultracheap fares that Phil Bakes had put in place.

In their frustration some pilots adopted goon tactics. The putrefied
head of an elk was thrown through the picture window at the home of one strikebreaker. A firebomb was later pitched at the home of a scab pilot in Boulder, Colorado. A Continental pilot was arrested outside a Continental office in El Segundo wearing camouflage clothing and carrying bolt cutters and acid. Stink bombs went off in the Continental corridors in the hubs of Houston and Denver.

In November 1983, two months after the Chapter 11 filing, two striking Continental captains made
a U-turn while driving in San Antonio and were pulled over by a state trooper. While the men were being questioned, another motorist pulled up with a bag she had seen the pilots ditch from their car. The bag contained two pipe bombs. Searching the car, the trooper found binoculars, a wig, a drill, maps—and photographs of houses belonging to three scab pilots,
including one that was just a few blocks distant. The would-be bombers were sent to prison for eight years.

ALPA, though never linked to the bomb plot or any other acts of violence, was consumed with loathing for Lorenzo. In the pilots’ anthology of familiar quotations, one achieved new currency at ALPA headquarters: “Nobody ever lands
with the gear up twice.” ALPA had learned its lesson. The world of deregulation was a cruel one, filled with vicious adversaries. The pilots vowed never again to be caught unawares. They would lay plans to exact revenge on Lorenzo. And in the meantime they would force other airlines, one in particular, to atone for his sins.