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Texas Air Corporation
FoundedJune 1980 (1980-06)
DefunctDecember 1990 (1990-12)
Key people
Frank Lorenzo

Texas Air Corporation, also known as Texas Air, was an American airline holding company, incorporated in June 1980 by airline investor Frank Lorenzo to hold and invest in airlines. The company had its headquarters in the America Tower in the American General Center in Neartown Houston, Texas.


The company initially acted as a holding company for Texas International Airlines, which Lorenzo owned through his investment firm Jet Capital.[1] Shortly after its formation, Texas Air founded New York Air, a low-cost carrier in the US Northeast.[2] In 1981, Texas Air acquired Continental Airlines through a hostile takeover bid,[3] and subsequently merged Continental with Texas International, retaining the Continental brand.[4] In 1986, Texas Air acquired both Eastern Air Lines[5] and People Express Airlines, including the assets of People Express's bankrupt subsidiary, Frontier Airlines.[6] In 1987, Texas Air consolidated its airline holdings by merging Frontier, New York Air and People Express into Continental, in turn making the latter the third-largest airline in the US,[7] and leaving Texas Air with two mainline carriers: Continental and Eastern, as well a number of commuter airlines.

Texas Air was famous for its tough stance against organised labor groups, and usage of union-busting tactics to lower labor costs within its subsidiaries.[8] In September 1983, Texas Air pushed Continental into bankruptcy, despite it being a solvent and financially stable company, stating that its high labor costs prevented it from effectively competing with non-union startup carriers.[9] The bankruptcy filing allowed Texas Air to fire 8,000 Continental employees, and subsequently rehire a small portion of them on non-union contracts at lower wage rates.[10] With lower labor costs, Texas Air successfully restructured Continental as a low-fare carrier, and allowed it to exit bankruptcy in 1986.[11] In the same year, the company began a four-year battle with the International Association of Machinists in an attempt to lower labor costs at Eastern.[12] In March 1989, Texas Air locked out Eastern's mechanics, which resulted in the majority of Eastern employees walking out on strike,[13] forcing the airline into bankruptcy.[14] In April 1990, Eastern's bankruptcy judge ordered the removal of Texas Air's control of the carrier, citing deliberate mismanagement and unsafe business tactics.[15]

At its peak in 1986, Texas Air was the second-largest airline in the world, behind the USSR's state carrier Aeroflot, and the largest airline in the United States, with control of 20% of the US domestic air travel market, a fleet of 600 aircraft, and an $8.5 billion valuation. However, by 1989, the company had $5.4 billion worth of debt,[16] and lost a total of $2 billion in just two years, breaking the record in both 1988 and 1989 for the largest losses ever reported by a US airline.[17] Following the loss of Eastern, in June 1990 Texas Air rebranded itself as "Continental Airlines Holdings", in order to "reflect the fact that the principal business of the company is Continental", according to Lorenzo.[18] In August of the same year, Lorenzo agreed to leave the company after selling his remaining shares to SAS.[19] However, the company was never able to recover from its significant debts and poor reputation, and entered bankruptcy in December.[20] In November 1992, Continental and Britt Airways (a commuter airline owned by Texas Air) were bought by an Air Canada-led consortium, resulting in Continental Airlines Holdings being dissolved.[21]


A Continental Airlines DC-9-10. This aircraft was formerly operated by Texas International Airlines before it was merged with Continental in 1982
An Eastern Airlines Airbus A300. Texas Air transferred this aircraft to Continental shortly after it acquired Eastern
Airline holdings
Company Acquired Defunct Fate Notes
Bar Harbor Airlines 1986 1987 Merged with Britt Airways
Britt Airways 1986 Sold, rebranded as ExpressJet Former subsidiary of People Express
Continental Airlines 1981 Sold, merged with United Airlines in 2012
Continental Micronesia Operated as a subsidiary of Continental
Eastern Air Lines 1986 1991 Declared bankruptcy and liquidated
Frontier Airlines 1985 1986 Merged with Continental Airlines Former subsidiary of People Express
New York Air 1980 1987
People Express Airlines 1986 1987
Provincetown-Boston Airlines 1986 1987 Merged with Britt Airways Former subsidiary of People Express
Rocky Mountain Airways 1985 1987
Texas International Airlines 1980 1982 Merged with Continental Airlines Predecessor to Texas Air Corporation
Non-airline holdings
CCS Automation Systems 1983[22] 1989[22] Merged with System One Airline reservation system
System One 1987 1990 Sold Airline reservation system

Former subsidiary of Eastern Airlines

Texas Air Leasing Corporation 1984[23] 1990 Liquidated Aircraft leasing firm

Alongside its official holdings, the company also operated through a number of shell companies in order to protect Texas Air's core assets from bankruptcy proceedings, such as Texas Air Fuel Services, which controlled all fuel transactions for the company's airline subsidiaries.

See also


  1. ^ Reckert, Clare M. (26 August 1972). "Jet Capital Gets Control of Texas International in $35‐Million Deal". The New York Times. ISSN 0362-4331. Retrieved 9 September 2021.
  2. ^ Pace, Eric (9 September 1980). "New York Air's Cut-Rate Shuttle; Fare $29 to $49 For New York To Washington Confidence Expressed Cut-Rate Fare Planned On New Airline Shuttle No Accord On Slots". The New York Times. ISSN 0362-4331. Retrieved 9 September 2021.
  3. ^ Witkin, Richard (3 March 1981). "C.A.B. BACKS TEXAS AIR ON ITS BID FOR CONTINENTAL". The New York Times. ISSN 0362-4331. Retrieved 9 September 2021.
  4. ^ "Continental, TI Airlines to Finish Merger Oct. 31". The Oklahoman. 7 October 1982. Retrieved 9 September 2021.[dead link]
  5. ^ Nash, Nathaniel C. (19 September 1986). "COMPANY NEWS; TEXAS AIR'S EASTERN BID APPROVED". The New York Times. ISSN 0362-4331. Retrieved 9 September 2021.
  6. ^ Salpukas, Agis (16 September 1986). "TEXAS AIR BUYING PEOPLE EXPRESS FOR $125 MILLION". The New York Times. ISSN 0362-4331. Retrieved 9 September 2021.
  7. ^ "People Express - Continental Merger". WKBW. Retrieved 9 September 2021 – via YouTube.
  8. ^ Salpukas, Agis (30 December 1984). "CONTINENTAL'S CHIEF: FRANK LORENZO; A TURNAROUND ARTIST FOR AN AILING AIRLINE". The New York Times. ISSN 0362-4331. Retrieved 9 September 2021.
    - Passell, Peter (10 May 1989). "Economic Scene; Frank Lorenzo Strikes Back". The New York Times. ISSN 0362-4331. Retrieved 9 September 2021.
  9. ^ "Continental Airlines files for voluntary bankruptcy". The Christian Science Monitor. 26 September 1983. ISSN 0882-7729. Retrieved 9 September 2021.
  10. ^ "CONTINENTAL AIR TO KEEP 4,200 ON JOBwork=The New York Times". The New York Times. 26 September 1983. ISSN 0362-4331. Retrieved 9 September 2021.
    - Taylor, Stuart J. (29 September 1983). "BANKRUPTCY AND THE UNIONS". The New York Times. ISSN 0362-4331. Retrieved 9 September 2021.
  11. ^ "Continental Airlines". The New York Times. 1 July 1986. ISSN 0362-4331. Retrieved 9 September 2021.
  12. ^ Eichenwald, Kurt (1 April 1988). "COMPANY NEWS; Eastern and Texas Air Sued by Machinists". The New York Times. ISSN 0362-4331. Retrieved 9 September 2021.
  13. ^ "Statement of Eastern Airlines President Phil Bakes With Eastern". AP NEWS. Retrieved 9 September 2021.
    - McFadden, Robert D. (5 March 1989). "MECHANICS' STRIKE VIRTUALLY SHUTS EASTERN AIRLINES". The New York Times. ISSN 0362-4331. Retrieved 9 September 2021.
  14. ^ "Eastern Files for Bankruptcy, Blames Pilots". Los Angeles Times. 10 March 1989. Retrieved 9 September 2021.
  15. ^ "Judge Appoints Trustee for Eastern Air, Ousts Lorenzo". Los Angeles Times. 19 April 1990. Retrieved 9 September 2021.
  16. ^ Battle for Eastern Airlines Part 2, retrieved 10 September 2021 – via YouTube
  17. ^ Salpukas, Agis (7 February 1990). "Large Losses Are Reported By Texas Air". The New York Times. ISSN 0362-4331. Retrieved 9 September 2021.
  18. ^ "EMBATTLED TEXAS AIR WILL CHANGE ITS NAME". Deseret News. 7 June 1990. Retrieved 1 December 2021.
  19. ^ Weiner, Eric (10 August 1990). "Lorenzo, Head of Continental Air, Quits Industry in $30 Million Deal". The New York Times. ISSN 0362-4331. Retrieved 9 September 2021.
  20. ^ Salpukas, Agis (4 December 1990). "CONTINENTAL FILES FOR BANKRUPTCY". The New York Times. ISSN 0362-4331. Retrieved 9 September 2021.
  21. ^ "Continental Accepts $450-Million Buyout Bid : Airlines: The offer by Air Canada and Texas-based Air Partners is expected to allow the beleaguered carrier to emerge from bankruptcy court early next year". Los Angeles Times. 10 November 1992. Retrieved 1 December 2021.
  22. ^ a b "CCS AUTOMATION SYSTEMS, INC". opencorporates. Retrieved 1 December 2021.
  23. ^ "TEXAS AIR LEASING CORPORATION". opencorporates. Retrieved 1 December 2021.