Md. officials drop effort to bring Lorenzo to BWI

March 10, 1993|By Suzanne Wooton | Suzanne Wooton,Staff Writer

Amid bitter opposition from political leaders and labor unions, Maryland transportation officials have ended their efforts to bring one-time airline czar Frank Lorenzo and his planned no-frills carrier to Baltimore-Washington International Airport.

State officials had been negotiating with Mr. Lorenzo for months and were prepared to offer various financial inducements, including joint marketing campaigns, to persuade him to use BWI as a hub.

But the move by Mr. Lorenzo to re-enter the industry has sparked intense opposition from organized labor, which threatened to boycott BWI. It also precipitated the introduction of a strongly worded legislative resolution in Annapolis, calling Mr. Lorenzo "the bad boy of the airline industry."

And a House budget committee in Annapolis has warned transportation officials not to offer Mr. Lorenzo any taxpayer money.

Transportation Secretary O. James Lighthizer, who characterized the opposition as "absolutely ferocious," said he told Mr. Lorenzo last Friday that "basically we weren't prepared to offer a package."

Neither Mr. Lorenzo nor representatives at his Houston investment company, Savoy Capital Inc., were available for comment yesterday.

During the 1980s, Mr. Lorenzo emerged as a leading player in the airline consolidation battles spawned by deregulation, leveraged buy-outs and cost-cutting strategies. As head of Texas Air Corp., he was renowned for strong-arm tactics with the unions. Ultimately, he was cast out of the industry by his creditors and because of his questionable tactics in managing Eastern and Continental airlines.

In trying to make a comeback, he has become a lightning rod with many who insist he symbolizes the greed and mismanagement that weakened airlines in the 1980s.

"Everything he has done has been to the detriment of the flying public," said Del. Timothy F. Maloney, D-Prince George's, chairman of the House appropriations subcommittee that oversees BWI.

"We have told them [transportation officials] not to spend any state money on bringing him to BWI," Mr. Maloney said.

The Maryland congressional delegation has expressed similar concerns in a letter to Gov. William Donald Schaefer. And in Washington, more than 50 congressmen have now urged Secretary of Transportation Federico Pena to bar Mr. Lorenzo from starting a new carrier.

Long before Mr. Lorenzo's plans became public, Maryland transportation officials quietly began talking with Mr. Lorenzo and representatives from Savoy Capital in hopes of bringing new airline jobs to the state and more traffic to BWI. Last month, Mr. Lighthizer said the state was in the "final stages" of negotiating an agreement.

But what was seen originally as an economic development opportunity has become a political minefield.

"The governor's philosophy is to pursue a good economic

opportunity, but in this case, he is very concerned with Lorenzo's track record. There's a lot of opposition from labor and the legislature," Page W. Boinest, a spokeswoman for the governor, said yesterday. "Obviously we can't move ahead with the [incentive] package."

A joint resolution, sponsored by three dozen lawmakers in Annapolis, describes Mr. Lorenzo as "the embodiment of ruthless management" and resolves that the state not spend any taxpayer money to assist him. A hearing on that resolution is set for next week in the House.

The state, which operates BWI, cannot legally deny any FAA-approved carrier the right to land there. But there was no indication about whether Mr. Lorenzo, who is said to drive a hard business bargain, would locate a new carrier at BWI without the financial incentives.

Mr. Lorenzo reportedly has put together a fleet of DC-9s to operate a low-cost, low-fare airlines with flights to key Northeast cities. So far, however, he has not applied to the Federal Aviation Administration for the necessary certificate to operate.

The federal Transportation Department decides whether an airline is financially sound, has adequate management expertise and whether its officials are likely to comply with government regulations.

If Mr. Lorenzo opts not to locate at BWI, union leaders can be expected to oppose any attempt to negotiate a similar deal at other airports.

"We'll continue trying to educate people about Frank Lorenzo's record,," said Randy Babbitt, president of Airline Pilots Association which represents 44,000 pilots. "After all, this is taxpayers' money we're talking about."

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