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As Lorenzo savored his success last week, he sounded alternately conciliatory and pugnacious toward Eastern's employees. "We're not union busters, we're airline builders," he said at one point. Later, though, Lorenzo took the offensive, declaring that it was essential that he receive wage concessions from the machinists' union. Said he: "There is no Santa Claus."
Eastern's unions met last week to discuss what Lorenzo might do as head of Eastern. They are plainly suspicious of their new boss. Said John Mazur, spokesman for the pilots' union: "Everyone knows what Frank Lorenzo is and what he does."
Many industry experts expect Lorenzo to re-create Eastern in the image of cut-rate Continental and New York Air. If that happens, few airlines will escape the fallout. Atlanta-based Delta is probably the most vulnerable, since it now competes with Eastern on 80% of its domestic flights.
The industry did not wait for Lorenzo to make the first move in a new bout of price slashing. American Airlines last week announced its "Spring for Less" fares, offering discounts of up to 75% on some seats on flights to 117 U.S. cities. The offer is good from April 1 through May 22. United, Delta, Republic and Eastern quickly unveiled their own discounts.
Fare battles will put new strain on an already beleaguered industry. The twelve major U.S. airlines suffered operating losses of $158 million during the final quarter of 1985, compared with a profit of $347 million during the last three months of 1984.
One of the shakiest airlines is TWA, which expects to lose $125 million during the first three months of 1986. Buying Ozark Air Lines is part of an aggressive plan to stanch that red ink. The merger could make TWA, which is best known as an overseas carrier, stronger domestically.
The Eastern-Texas Air and TWA-Ozark deals merely accelerate a merger binge that was already well under way. In the past four months, People Express has acquired Frontier, and Northwest has agreed to buy Republic. Says Louis Marckesano, who follows the industry for the Janney Montgomery Scott investment firm: "At this rate, in five to ten years the American airline industry will look like the U.S. auto industry, with three or four megacarriers covering the globe." If that happens, Texas Air and TWA are determined to be among the survivors.