Texas Air Corporation
| Company type | Holding company |
|---|---|
| Industry | Airline industry |
| Founded | June 1980 |
| Founder | Frank Lorenzo |
| Headquarters | Houston , United States |
Area served | United States |
| Products | Airline holdings (Continental Airlines, Eastern Air Lines, People Express Airlines, etc.) |
Texas Air Corporation, commonly referred to as Texas Air, was an American airline holding entity established in June 1980 by aviation investor Frank Lorenzo. Based in the America Tower within the American General Center in Houston, Texas, the company functioned as a platform for acquiring and investing in airlines.
History
Originally created as a holding firm for Texas International Airlines, which was owned by Lorenzo's Jet Capital, Texas Air was among the first to implement the airline holding company concept. It soon introduced New York Air, a budget carrier operating in the Northeastern United States. In 1981, Texas Air conducted a hostile takeover of Continental Airlines via a stock tender offer, subsequently merging it with Texas International under the Continental name. By 1986, the company pursued rapid expansion by purchasing Eastern Air Lines and People Express Airlines, along with assets from the bankrupt Frontier Airlines. The integration of Frontier, New York Air, and People Express into Continental positioned it as the third-largest airline in the US, leaving Texas Air with two principal carriers: Continental and Eastern.
Renowned for its stringent labor cost control measures, Texas Air utilized union opposition strategies to lower expenses. In 1983, Continental sought Chapter 11 bankruptcy protection due to elevated labor costs, which facilitated workforce reductions and rehiring at reduced wages. This financial reorganization allowed Continental to emerge from bankruptcy in 1986 as a low-cost airline. Texas Air experienced extended labor conflicts at Eastern, culminating in a 1989 lockout and strike that ultimately pushed Eastern into bankruptcy. In 1990, judicial intervention removed Texas Air’s authority over Eastern.
At its zenith in 1986, Texas Air ranked as the world's second-largest airline by fleet size and commanded a 20% share of the US domestic market with an estimated value of $8.5 billion. Nonetheless, by 1989, it carried $5.4 billion in debt and suffered unprecedented losses amounting to $2 billion across two years. After losing control of Eastern, Texas Air rebranded itself as "Continental Airlines Holdings" in 1990 to emphasize its focus on Continental. Later that year, Lorenzo divested his holdings by selling to Scandinavian Airlines (SAS). Unable to surmount its financial burdens and tarnished reputation, the company filed for bankruptcy in December 1990. Two years later, Continental and commuter carrier Britt Airways were acquired by a group led by Air Canada, leading to the dissolution of Continental Airlines Holdings.
This history underscores Texas Air’s assertive acquisition approach, emphasis on reducing labor expenses, and eventual financial downfall amid a fiercely competitive US airline market.
Holdings
| Airline holdings | ||||
|---|---|---|---|---|
| Company | Acquired | Defunct | Fate | Notes |
| Bar Harbor Airlines | 1986 | 1987 | Merged into Britt Airways | |
| Britt Airways | 1986 | Sold and rebranded as ExpressJet | Previously owned by People Express | |
| Continental Airlines | 1981 | Sold; merged with United Airlines in 2012 | ||
| Continental Micronesia | Operated as Continental's subsidiary | |||
| Eastern Air Lines | 1986 | 1991 | Declared bankruptcy and dissolved | |
| Frontier Airlines | 1985 | 1986 | Absorbed into Continental Airlines | Former People Express subsidiary |
| New York Air | 1980 | 1987 | ||
| People Express Airlines | 1986 | 1987 | ||
| Provincetown-Boston Airlines | 1986 | 1987 | Integrated into Britt Airways | Previously part of People Express |
| Rocky Mountain Airways | 1985 | 1987 | ||
| Texas International Airlines | 1980 | 1982 | Merged with Continental Airlines | Predecessor entity to Texas Air Corporation |
| Non-airline holdings | ||||
|---|---|---|---|---|
| CCS Automation Systems | 1983 | 1989 | Merged with System One | Provider of airline reservation systems |
| System One | 1987 | 1990 | Divested | Airline reservation system; formerly under Eastern Airlines |
| Texas Air Leasing Corporation | 1984 | 1990 | Liquidated | Aircraft leasing company |
To protect key assets during financial distress, Texas Air utilized multiple shell corporations, such as Texas Air Fuel Services, which handled fuel procurement for its airline subsidiaries.