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United Dominates Newark, Thanks to People Express

"I was the guy who signed the original lease between People Express and the port authority," said McAdoo, now an analyst for Imperial Capital in Los Angeles. "I remember that well."

The story of the rise of Newark Airport is one more illustration of Lorenzo's immense influence on today's airline industry.

Today, United's Newark operation -- which Lorenzo built -- is the most profitable single airline hub in the country, US Airways (LCC) President Scott Kirby has said. Lorenzo was the first to use bankruptcy to restructure an airline; now bankruptcies represent a common industry strategy. He redesigned airline fares, introducing both low "peanuts" fares and restrictive, non-refundable fares. He also started with an insignificant western airline and built it into the world's biggest airline group, a course that America West's Doug Parker has retraced, generally absent the unfortunate relationship with labor.

Lorenzo asked Nobles, who was running the Pan Am shuttle, to join Continental in February 1988 in order to help spin off the Eastern shuttle as a separate company. That would have enabled Lorenzo to sell equity and debt in a viable business separate from failing Eastern. But Eastern's unions viewed the deal as an anti-labor exercise and convinced a judge to issue a restraining order. Nevertheless, Lorenzo managed to convince Nobles, who had good relations with Pan Am's unions, that he was not motivated by antipathy towards labor.

When the spinoff failed, Lorenzo asked Nobles to run Continental's customer service operation. "Frank always treated me fairly," Nobles said. "But when he tried to spin off the shuttle, he wouldn't let me talk to the press. So we could never tell our side of the story."

-- Written by Ted Reed in Charlotte, N.C.

>To contact the writer of this article, click here: Ted Reed
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