Lorenzo and the bankruptcy courts
...k Lorenzo was a master in the bankruptcy courts. It was the first time in US history that a US airline had survived two bankruptcies. "In 1983 Lorenzo took Continental into bankruptcy court, filing for Chapter 11." Hartley (2003) This enabled Lorenzo to break up the Union and Lower His Labor Costs. In 1986 Continental Emerged from Bankruptcy as the Airline with Cheap Tickets. When a corporation goes into bankruptcy quite often the creditors will only get pennies on the dollar. Lorenzo being a master in the bankruptcy courts knew this. He also knew that it would nullify previous contracts that Continental had signed. In doing so Lorenzo knew that the company could emerge with a clean slate. This clean slate would give Continental the room that I needed to navigate as a low-priced leader in the airline industry. Lorenzo knew that he could cut labor, operating, and interest costs he could, save millions of dollars and cut fare prices. BACK IN A TAILSPIN For the second time in seven years, a financial downdraft swept Continental Airlines into bankruptcy court last week. Faced with rising fuel costs and $2.2 billion of debt incurred under Frank Lorenzo, the airline's expansion-minded former boss, Continental filed for protection while it prepares a repayment plan. "We were just running out of cash," said Chairman Hollis Harris, who vowed to maintain the airline's full schedule of flights. The filing came as the nation's fifth largest carrier was beginning to win back customers with a better on-time performance and other improvements. Most passengers stuck with the airline. The real crunch may come next m...