Hollis Harris is trying to take the Frank Lorenzo out of Continental Airlines.
Since taking over as chairman of the debt-laden airline last August, Hollis has begun to put his own stamp on an airline that had become indelibly identified with the controversial Lorenzo.
Once the centerpiece of the nation's largest airline company, the carrier also had become identified in the public mind with poor service.
Now, Harris has set out to change all that as he attempts to bring the nation's fifth-largest airline successfully out of bankruptcy proceedings.
"My intention, and that of the board's too -- and Frank's -- was to put a different look to the airline, starting with the chief executive officer," Harris said in an interview from his Houston office.
In part, that has meant replacing Lorenzo's top people. It also has meant bringing a different style of management to the airline. Lorenzo was an aggressive, tightly wired financial innovator who was quick to seize on the opportunities deregulation presented. Harris, who started as a Delta Air Lines ticket agent and worked as a baggage handler, aircraft engineer and marketing executive before becoming its president, is deeply rooted in airline operations.
And if Lorenzo may be remembered as an empire builder, then Harris's contribution may well be as a morale builder.
At an airline where spirits once fell so low that Lorenzo once tried to energize its employees with a pep rally featuring Gladys Knight and the Pips, Continental employees appear relatively upbeat under Harris. "He's more employee-oriented, and that's good for us," said a gate attendant at Washington's National Airport. "We're confident he can get us out of the financial mess."
Employees are "cautiously optimistic," said flight attendant Sy Meheen.
Although service had already begun improving at Continental before Lorenzo left, Harris said, as long as Lorenzo was around, it was hard to convince people that the airline had changed. Lorenzo "was a lightning rod, and the media and analysts focused on him and not the people and the company," Harris said.
According to a filing made when Continental filed for bankruptcy protection late last year, "the perception, particularly among business travelers, that Continental is a low-cost, low-service carrier" cost the airline approximately $500 million a year.
Harris said he hopes improving employee morale will help erase the public's negative perceptions. "I told the folks from day one, if we take care of the people, they are going to take care of the customer," Harris said. "In any service business, I think it's the people that determine the success or failure of that business, so I concentrate on them."
Small but symbolic changes, like allowing headquarters workers to take off on Christmas Eve and New Year's Eve, are part of that.
But the airline's financial problems make taking care of employees a difficult balancing act. Last weekend, for instance, Continental's pilots agreed to give up a scheduled pay increase this year and made other concessions in exchange for future improvements in pension and other benefits. The package still must be approved by the bankruptcy court.
"He's the kind of man who generated a lot of loyalty from the people who worked for him," said a former colleague at Delta. "It would be hard to find anybody at Delta who overall was better thought of than Hollis."
Even so, building morale at Continental may take time. A recent employee opinion survey at the airline found that a majority agreed that Continental was a better place to work than a year before, but it also found that many employees believe that "Continental is not a company that cares about people" and found discontent with pay and benefits.
Changing the airline's image may also take more money that Harris has right now. Before the bankruptcy, Harris had initiated visible changes -- a new color scheme and logo for the planes and a new cabin design to give passengers more room. Harris hoped that the makeover, which so far has been limited to one aircraft, would create the image of "a new Continental."
But cash that could have been used to revamp planes was needed more urgently to pay day-to-day bills. With the bankruptcy, the makeover was put on hold -- a decision Harris said he hopes soon to reverse.
But Continental's problems are more than just image.
A major task for the airline is to restructure its heavy debt, a job for which a special internal team assisted by Salomon Brothers Inc. had been set up prior to the bankruptcy filing.
"If we can work out an equitable debt restructuring," Continental can be competitive with the other major players in the industry, Harris said. One possible solution is that some debtholders might be persuaded to swap their debt for equity.
The company also needs to reduce the number of aircraft types in its fleet. Continental operates six different types of aircraft in a variety of models that complicates both in-flight service and maintenance. Continental has retired some aircraft in order to save fuel. In that and in its purchases of new aircraft, "the ideal will be to simplify the fleet," said Harris.
Harris won't estimate how quickly the airline might be able to come up with a reorganization plan to help get it out of bankruptcy. "We'd like to say we can do it in a year, and maybe we can, but most people around here say 12 to 18 months," he said.
Harris said he believes Continental can continue to grow, despite the bankruptcy filing. "I have the basic philosophy that you can't save yourself into profitability," he said. "I think you have to grow yourself into profitability."
Continental is selling its Seattle-Tokyo route to American Airlines Inc. for $140 million to provide cash for operations, but Harris said that is the only major asset he plans to sell. He has also pursued political solutions to some of the problems besetting Continental and other carriers. He is trying to persuade regulators to release government stocks of oil to the airlines if prices resume their upward trend and he is lobbying for increasing the percentage of a U.S. carrier that a foreign carrier can own.
Before the jolt of higher fuel prices and the slump in the economy, Continental was turning the corner toward profitability. Despite its bankruptcy filing, airline industry analysts regard it as a likely survivor of the shakeout now underway in the airline industry.
So does Harris. "Continental is a very good airline people-wise and route structure-wise and has the capability to be a top-tier competitor," Harris said. "Whatever his methods, and whatever people thought of them," Harris said, Lorenzo "put together a good airline."