Judge rebuffs Lorenzo airline at BWI Transportation Dept. urged to reject carrier

September 09, 1993|By Suzanne Wooton | Suzanne Wooton,Staff Writer

An administrative law judge in Washington has recommended that Frank A. Lorenzo's application to launch a discount airline at Baltimore-Washington International Airport be denied.

The ruling, which came late yesterday, is considered likely to RTC quash the yearlong comeback effort by the former airline magnate, although the U.S. Transportation Department will make the final decision.

"The judge has said he does not think they are qualified to operate an airline, but it is still up to the department," said Bill Moseley, a spokesman for the Transportation Department. A final decision could come within a month.

Amid intense political and labor opposition, the Transportation Department ordered a highly unusual hearing last spring to evaluate whether ATX Airlines -- formerly dubbed Friendship Airlines -- should be granted a certificate to operate. Hearings were held this summer in Washington.

In yesterday's ruling, Judge Robert L. Barton Jr. wrote that ATX "had made a sufficient showing with respect to financial fitness and management competence."

But, citing the company's failure to produce documents that the judge had requested, Judge Barton wrote, "It certainly cannot be trusted to comply with federal laws regulating the transportation of passengers and cargo in scheduled air service."

The ruling, as well as the unusual hearing process, came in response to a motion by the 44,000-member Air Line Pilots Association union that Mr. Lorenzo's bid be denied.

"Frank Lorenzo had his day in court and could not convince an administrative law judge that he's willing to comply with rules and regulations," said John Mazor, a spokesman for the union.

But a spokesman for Houston-based ATX Airlines, which is three-fourths owned by Mr. Lorenzo, cautioned that the judge's decision was merely a recommendation.

"We think it is fundamentally and thoroughly wrong, and we are absolutely confident that the DOT will refuse to follow that recommendation," said Richard Danforth, a spokesman for ATX.

According to Mr. Danforth, the Transportation Department had opposed the pilots union's motion to dismiss ATX's application. The department said that ATX had submitted sufficient evidence of the requirements for approval: managerial competence, financial resources and compliance in the hearings.

Mr. Danforth acknowledged that ATX had failed to produce documents requested by Judge Barton from various lawsuits against Lorenzo-controlled airlines, including safety violations at the now-defunct Eastern Airlines Inc. But he said many documents had been lost or sealed under previous court orders.

"All this stuff is out of our control," Mr. Danforth said. "Apparently he [Judge Barton] doesn't like our courtroom demeanor."

ATX had hoped to begin daily service this summer at BWI, flying to Boston and Orlando, Fla. Those routes would not have competed with Southwest Airlines' new discount-fare service to Cleveland and Chicago, scheduled to begin at BWI next week.

In trying to make a comeback, Mr. Lorenzo had become a lightning rod to many who argued that he symbolized the greed and mismanagement that weakened airlines in the 1980s. Mr. Lorenzo clashed repeatedly with labor in the 1980s, when he ran Texas Air Corp.

His critics depicted his tenure in the industry as a decade of mismanagement -- highlighted, they said, by bankruptcies, layoffs, strikes and broken promises. Thousands of Mr. Lorenzo's employees, they said, lost their jobs, while others were left holding worthless stock.

The pilots union issued a statement last night, saying it was "fitting that Frank Lorenzo is being retired even as air traffic controllers are being rehired. It is hopefully a sign that the labor acrimony of the 1980s is behind us."

Mr. Lorenzo's empire -- at one point encompassing 20 percent of the domestic airline industry -- included Continental Airlines and the now-defunct Eastern Airlines, New York Air, People Express Airlines and Frontier Airlines.

In seeking to start ATX, Mr. Lorenzo argued that the public "is begging for an alternative discount airline service that doesn't require 14-day advance bookings and Saturday night stay-overs."

Political opposition this year led Maryland officials to drop their efforts to help Mr. Lorenzo financially.

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