Wednesday, April 06, 2011

Akin Gump and the Psychopathic Client: Eastern Airlines, the "Serial Killer," and the Serial Killer's Enabler

Because psychopathic personalities represent an extreme, they provide many insights into the nature of narcissism. Not only do they portray in sharp relief narcissists' tendency to act out (which in other cases is less antisocial) but they also shed light on narcissists' underlying grandiosity. It is significant, for instance, that narcissistic characters and psychopathic personalities show a need for instant gratification, an ability to contain desire or tolerate frustration. One could regard this weakness as an expression of infantilism in the personality, but I believe it has a different meaning and origin, reflecting the deficient sense of self.  One must remember that in other respects--namely in their ability to manipulate people, organize and promote schemes, and attract followers--narcissistic characters and psychopathic personalities are anything but infantile.

In saying this, I should add that psychopathic personalities are not necessarily what society calls “losers.” There are successful psychopaths according to Alan Harrington, who made a study of these personalities-- brilliant, remorseless people with icy intelligence, incapable of love or guilt, with aggressive designs on the rest of the world. Such an individual may be an able lawyer, executive or politician. Instead of murdering others, Harrington comments, this person might become a corporate raider, murdering companies, firing people, instead of killing them, chopping up their functions, rather than their bodies.” Ironically, the key to this kind of success is the person’s lack of feeling--which is the key to all narcissistic disturbances. As we have seen, the greater the denial of feeling, the more narcissistically disturbed the individual is.

A possible example of the corporate "psychopath" is Frank Lorenzo, an American businessman. He is most famous for his leadership of Texas International Airlines and its successor holding company Texas Air Corporation between 1972 and 1990, through which he formed or acquired a number of major U.S. airlines including Continental Airlines, Eastern Airlines, Frontier Airlines, New York Air and Peoplexpress. In the late 1980s Lorenzo began the systematic dismantling of Eastern Airlines, chopping up the company's functions, selling off its assets--all in an effort to boost the profitability of the parent company, Texas Air.

In the late 1980s, the D.C. law firm of Akin, Gump, Strauss, Hauer & Feld, began its representation of Eastern Airlines in the company's disputes with its unions whose members objected to Lorenzo's apparent efforts to turn a Fortune 500 company into a "junker"--a once profitable company that, in Lorenzo's corporate strategy, was of value only for scrap.

As an airline manager, Lorenzo gained a reputation of union busting, stemming from his leadership during the 1983 bankruptcy of Continental Airlines that enabled the company to void its union contracts, and during the strike and bankruptcy of Eastern Airlines that eventually led to its permanent shutdown in 1991. Lorenzo’s history is contentious, both “despised by unions and admired by airline strategists.” In 1990, after Lorenzo liquidated his holdings after 18 years in the airline industry, the “main architect of airline deregulation,” offered this perspective on Lorenzo’s leadership: “I don’t think there is any question that he saved Continental, but his tactics obviously didn’t work when he took over Eastern.”

In 1988 Phil Bakes, the president of Eastern Airlines, announced plans to lay off 4,000 employees and eliminate and reduce service to airports in the Western United States; he said that the airline was going "back to our roots" in the East coast of the United States. At the time Eastern was the largest corporate employer in the Miami area, and remained so after the cuts. John Nordheimer wrote in a New York Times article that the prominence of Eastern in the Miami area decreased as the city became a finance and trade center and as the area had a population increase-based economic growth, instead of a purely tourism-based growth.

Although Eastern's employees saw Lorenzo at the time as a savior, he would prove to be anything but a hero to the employees by the end of the decade. This event is widely seen as the beginning of the unwinding of the company, and the beginning of a steep decline into a period that saw strikes, empty planes, mass layoffs, bankruptcy, and eventually a ceasing of operations.

During Lorenzo's tenure, Eastern was crippled by severe labor unrest. Asked to accept deep cuts in pay and benefits, Eastern's mechanics and ramp service employees, represented by the IAM (International Association of Machinists and Aerospace Workers), walked out on March 4, 1989. A sympathy strike called by the pilots represented by ALPA (Air Line Pilots Association) and flight attendants represented by TWU (Transport Workers Union) effectively shut down the airline's domestic operations. Non-contract employees, including airport gate and ticket counter agents and reservation sales agents, did not honor the strike. Due to the strike, flights were canceled, resulting in the loss of millions of dollars in revenue.

According to Jack E. Robinson's book "Free Fall" about Eastern and its bankruptcy, Lorenzo seriously considered a sale of Eastern to Peter Ueberroth immediately following the strike. Issues over interim management while the sale was being processed eventually caused the deal to fall through. Although other buyers, such as Jay Pritzker expressed interest in the airline, Lorenzo eventually declared Eastern as being "not for sale".

Lorenzo sold Eastern's shuttle service to real estate magnate Donald Trump in 1989, under whom it became the Trump Shuttle, while selling other parts of Eastern to his Texas Air holding company and its major subsidiary, Continental Airlines, on disadvantageous terms to Eastern.  In 1989, George Berry, the Georgia Industry and Trade Commissioner, asked Eastern to consider moving its headquarters from the Miami area to the Atlanta area.

As a result of the strike, weakened airline structure, inability to compete after deregulation and other financial problems, Eastern filed for bankruptcy protection on March 9, 1989.  This gave Lorenzo breathing room, and allowed him to continue operating the airline with non-union employees. When control of the airline was taken away from Lorenzo by the courts and given to Marty Shugrue, it continued operations in an attempt to correct its cash flow, but to no avail.

The management in the Miami-Dade county headquarters agreed to shut down Eastern; the airline stopped flying on midnight Saturday, January 19, 1991.

Related posts can be found at the following sites:

Akin Gump: A Culture of Narcissism?

Did Akin Gump Operate Like a Cult?

Akin Gump: The Mystery of the Harassment Ringleader

A comic look at an owner's use of an organization to glorify the owner's grandiosity:


Gary Freedman said...

The first two paragraphs of this post are a direct quote from Narcissism: Denial of the True Self (1984), by Alexander Lowen, M.D., a psychiatrist.

Gary Freedman said...

I suppose I could write a post about Akin Gump and the Impeached President, who had sex in his office while he talked on the telephone with Congressmen!

Gary Freedman said...

Randy Levine, Esq., senior counsel in the New York office of Akin Gump, is the current owner of the New York Yankees.

Gary Freedman said...

The character George Costanza on Seinfeld said in one episode about the fictional Steinbrenner: "No one knows what this guy's capable of; he fires people like it's a bodily function!"

Gary Freedman said...

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