Frank Lorenzo

Francisco Anthony "Frank" Lorenzo (born May 19, 1940) is an American businessman.

He graduated in 1961 with a B. A. degree in economics, followed by an MBA from Harvard Business School in 1963, as he was turning 23.

Lorenzo's first professional jobs, from 1963–1966, were at Trans World Airlines, as a Senior Analyst, and then at Eastern Airlines, as Manager of Financial Analysis.

He also spent six months in the Army reserve in 1964, and then returned to his job in New York.

He formed Lorenzo & Carney, Inc., a financial advisory firm specializing in airlines, in 1966 with Robert Carney, who had also attended Harvard Business School.

Their first offices were atop the Pan Am Building in New York.

The firm participated in the establishment of a supplemental airline, Universal Airways, and also in the refinancing of British West Indian Airlines (BWIA).

Lorenzo and Carney later formed Jet Capital Corporation in 1969, initially as an aircraft leasing company.

Jet Capital raised $1.5 million in a public stock offering, and was later asked by Chase Manhattan Bank to attempt a refinancing plan for Texas International Airlines (TIA) as an alternative to bankruptcy, as the airline was in default on its aircraft bank loans.

Jet Capital put together a refinancing and equity infusion for Texas International Airlines in 1971.

He managed Continental Airlines and Texas International Airlines between 1972 and 1990, through airline deregulation.

As part of the refinancing plan for Texas International Airlines (TIA), Jet Capital acquired control of TIA in 1972, and received 26% of TIA's equity interest and 59% of its voting power for $1.15 million.

Lorenzo became its president and Carney its executive vice president in August 1972.

The deal was approved by the Civil Aeronautics Board (CAB), which regulated the airline industry in the United States at the time, after a contentious CAB approval process fought with Howard Hughes, who at the time controlled Hughes Airwest.

When Lorenzo took control of TIA in 1972, it was on the verge of financial collapse, having lost money since 1966.

Two years later, Lorenzo's management was able to steer the company to break even due to significant streamlining of operations.

Some years later an analyst from Oppenheimer & Company, citing Lorenzo and business-partner Carney's strategies of substituting obsolete planes with jets, eliminating unprofitable routes in exchange for destinations with higher demand, and instituting half-price "peanut-fares" for the first time in the aviation industry, noted TIA's ability to compete and win against much larger and financially stronger companies.

TIA also had to compete with a new-at-the-time Texas intrastate airline, Southwest Airlines, which was union-free then and had much lower costs.

Lorenzo's management changed the character of the airline, having revamped its fleet, increased utilization, cut costs and dropped many losing routes, while adding flights on strong segments.

The average trip distance per passenger boarded jumped 25% from 1972 to 1976.

In 1977, the company earned $8 million, and in 1978, TIA's reported net income was up to $13.2 million and it was described as an "aggressive, innovative carrier".

TIA implemented in 1977, just before the advent of airline deregulation, the first unrestricted airline low fares, which were called "Peanut Fares."

The success of this promotion drove major improvement in TIA's financial position.

In his book on aviation history, author R.E.G. Davies refers to these fares as "...a watershed in airline passenger tariffs."

In 1978, the airline world was astonished to learn that Lorenzo (TIA) had moved to take over National Airlines, a domestic trunk airline three times its size, having purchased 9.2% of the stock of National Airlines.

For several weeks starting in June 1978, Texas International Air had acquired shares of National Airlines, filing documents with the U.S. Securities and Exchange Commission when its stake reached just short of the 10% that would require prior approval of the Civil Aeronautics Board (CAB).

TIA was reported at the time to be studying the "possibility of seeking control" of National.

Several weeks later, TIA announced intentions to buy up to 25% of National's stock, and requested approval from the CAB to acquire the stock and direct control of National.

TIA's attempted takeover of the much larger National "surprised a lot of people", because National was so much larger than TIA at the time and no airline had ever attempted an "unfriendly" takeover of another airline before.

Lorenzo's management team viewed National's stock as significantly undervaluing the assets of the company, and the move was financial in addition to being strategic and aimed at combining the routes of the two airlines.

A competing offer for control of National was submitted to the CAB by Pan Am, and National ultimately agreed to be acquired by Pan Am; these actions drove up the price of National's stock.

The CAB gave TIA and Pan Am each permission to acquire up to 25% of National's shares, and the two companies acquired 45% of the shares in total.

Lorenzo also led the creation and management of the holding company for the group, Texas Air Corporation, through which New York Air was formed in 1980 and Eastern Air Lines was acquired in 1986, as well as Frontier Airlines and People Express Airlines.

As an airline manager, Lorenzo earned a reputation for low fares and cost cutting, as well as union busting, as he and other airline managers pursued an affordable business model for the newly deregulated aviation era.

Lorenzo was esteemed by airline regulators for his commitment to low fares, while others in the industry referred to Lorenzo as "the embodiment of deregulation".

As R. E. G. Davies, the former aerospace historian at the Smithsonian Institution put it, Lorenzo "challenged the entire structure of cost-and-revenue relations that had long existed in a closely protected corporate environment and in doing so generated a cause célèbre of historic proportions".

Born to Spanish immigrants Olegario (died 1980) and Ana (née Mateos, died 1996), Lorenzo grew up in Queens, New York.

His father was a long-time beauty salon proprietor in Manhattan; his mother worked as a hairdresser at their salon.

Lorenzo attended Forest Hills High School and then worked his way through Columbia University, holding several jobs, including at Macy's as a salesperson and Coca-Cola as a truck driver and member of the Teamsters Union.

Since 1990, Lorenzo has been chairman of Savoy Capital, Inc., an asset management and venture capital firm, and he has served as a trustee for The Hispanic Society of America since 2005.