Donald Trump’s airline went from opulence in the air to crash landing
When Donald Trump’s new airline, the Trump Shuttle, launched on a summer day in 1989, tuxedoed waiters with white gloves passed out smoked salmon, honey chicken skewers, and chocolate truffles. It was early in the day, but champagne flowed at Logan Airport.
After a string quartet rested its bows, Trump took the microphone and struck a discordant note: He railed against Pan Am, his rival in the shuttle business. He suggested Pan Am’s flights were unsafe, that the company was strapped for cash and couldn’t spend as much to maintain planes as Trump Shuttle.
“I’m not criticizing Pan Am,” Trump said that day. “I’m just speaking facts.”
Executives at Trump’s newest venture were aghast. In a highly competitive business, one in which Trump had no experience, the new boss had tossed decorum to the wind and made claims he had no evidence to support.
“We said, ‘Donald, don’t ever do that again,’ ” recalled Henry Harteveldt, who was the company’s marketing director. “It was wrong. We had no proof to back that up. And there’s an unwritten rule in the airline business that you don’t attack someone else’s safety record. There but for the grace of God go I.”
Echoes of Trump Shuttle reverberate in the Trump presidential campaign. He bashed his rivals with scant justification, grabbed media attention with flash and dazzle, and relied on gut instinct to pursue strategies that flouted industry norms.
But while Trump broke into the shuttle business with typical bravado and brand mastery, he was brought low by a series of missteps and a softening economy. His lack of expertise in East Coast skies took a toll, and he was forced to give up the airline after less than three years.
And Trump’s unfounded remarks about Pan Am safety? They almost immediately came back to bite him. Trump’s own airline was struck by a near-tragedy within its first three months, when the nose gear failed on one of his jets and forced a crash landing at Logan.
Despite its short, rocky life, Trump today blames outside forces for its demise and maintains the Trump Shuttle was a qualified success.
“It was a great experience. I enjoyed it,” Trump said in an interview. “It was incredibly well financed. That was the days where banks put up more than 100 percent of financing.”
“I ran it really well,” he added. “But the markets collapsed. The whole thing collapsed. For airlines, real estate. Everything. It was the depression.”
. . .
Eastern Airlines owner Frank Lorenzo was at a party at the Metropolitan Museum in New York when he spotted Donald Trump.
Lorenzo’s airline was struggling and needed an infusion of cash. The company’s decades-old shuttle — which transported white-collar businessmen and women between Boston, New York, and Washington — was the quickest source of revenue.
Lorenzo had never met Trump, but he did know something about the businessman: He liked New York icons, and the shuttle flight was a well-known icon. Trump had recently purchased the Plaza Hotel in New York and was about to seal a deal for the Taj Mahal Casino Resort in Atlantic City.
“Donald liked to associate himself with things that spelled New York,” Lorenzo said in an interview. “If he could have bought the Empire State Building, he would have.”
Over breakfasts at the Oak Room inside the Plaza Hotel — and during an outing on Trump’s yacht with their families — Lorenzo and Trump negotiated the sale of the shuttle fleet, airline terminals, and equipment.
They settled for $365 million.
Even at the time, Trump was widely believed to have overpaid. When his team added up how much it would cost to start such a carrier from scratch, they estimated around $300 million. Still, they calculated that if he got about 60 percent of the market share, he could easily pay off the debt.
“He said he wanted it,” said Bruce Nobles, the industry veteran hired to run the business. “Was it ego? Seeing his name flying back and forth between New York and Washington and Boston with all the power brokers of the world? Yeah, I guess it was ego.”
. . .
The day of the grand opening, Trump himself flew to each of the three cities served by the airline. Passengers got a half-liter of champagne and long-stemmed roses. At Logan, one of the first passengers happened to be the renowned ballet dancer Mikhail Baryshnikov.
It was nice but, some thought, too much.
“You have these awful carpets at Logan. . . . It was incongruous,” said Sue McGovern, who helped coordinate Trump’s party at Logan. “It was trying to create an image that wasn’t. It was forcing things.”
In her mind, it was a sign of things to come: “He missed the boat. We wanted convenience, not opulence.”
But many of the employees were thrilled. Under Eastern Airlines, they had been on strike, and Trump hired many of them to work at his airline. He also didn’t cut pay or seniority.
“He threw us out a lifeline and kept us afloat,” said Maria Catalano, a former flight attendant. “I don’t think you’d find any Trump employee at the airline saying anything bad about him. He saved us.”
Trump initially could not contain his excitement over his new toy.
“This is something from day one I have said I want to have my name on,” he said at a press conference just as he was about to take over the Shuttle. “I hope my name does a lot for the shuttle, and I hope the shuttle does something for my name.”
Stumbling over his enthusiasm at one point, he called the shuttle a “truly great transportation whatever.”
“Let’s be honest. If anyone else had started an airline, you never would have gotten that many reporters,” he said later. “That was like a presidential press conference.”
He was also asked about what it was like to fly on his own airline, looking down at his properties below.
“Truthfully? Truthfully it was great for the Trump ego,” he said. “I’m not supposed to say that.”
He also repeatedly referred to his airline as a “diamond in the sky.”
It all struck even some of his own employees as a bit much.
“He certainly was a man known for his bravado. He promised people a diamond in the sky when we had 21 of some of the oldest, worst maintained 727s then flying,” said Harteveldt, the marketing director. “He’s giving a press conference promising a diamond in the sky. I’m saying, ‘You may have to settle for cubic zirconium to start.’ ”
. . .
On airplanes that were worth about $4 million each, Trump spent about $1 million apiece to redesign them. He wanted a T on the tail of the plane as big as possible. A giant TRUMP was painted on the side.
The in-flight magazines featured Trump on the cover. The labels on the wetnaps had Trump Shuttle on them. New seat belt buckles were made of chrome, and he wanted all flight attendants to have necklaces with real pearls. (After warnings that would be too costly, they gave out fake strands.)
Trump also designed new uniforms that, for the flight attendants, turned out to be impractical.
“We had this pretty white blouse that showed a little cleavage,” said Catalano, the former flight attendant. “You can’t have that kind of a uniform. As a flight attendant, you’re bending down or picking things up.
“Many of us put safety pins in the back to keep them closed,” she added. “They had to change the style after enough of us complained.”
Trump wanted the planes to feel like a private jet. The wood panels were made of bird’s eye maple. The burgundy carpet was the most plush in the business, but it was too thick: The center panel had to be ripped up after flight attendants struggled to push drink carts down the aisle.
In the lavatories, Trump — who relied on an adviser who had helped design his yacht — wanted the sink to be made out of real marble. After being told the fixture would be too heavy, faux pink marble was used instead. The lights installed were bright makeup lights, not the dim fluorescent that most planes had. The sinks had an automatic sensor to turn on the tap.
To some at the time, it all seemed a bit lavish. The flights only lasted for 45 minutes, and most were using them to commute to business meetings. Surveys of passengers found the three most important things to them were schedule, reliability, and the frequent flier program.
“We paid too much to refurbish the airplanes,” said Nobles, who was later fired by Trump, after which they settled a contract dispute out of court. “My argument at the time, which fell on deaf ears, was no one was going to fly on our planes because they looked better. He disagreed because his modus operandi was to make things look flashier than anyone else.”
Trump’s rivals also used the excess to their advantage. Pan Am launched a $5 million advertising campaign apparently spoofing Trump and debuting their new spokesman: Milburn Pennybags, the tycoon from the game Monopoly.
“On which shuttle will you find the world’s most famous investor in real estate, hotels, and transportation?” the ads asked.
Trump now says he has no regrets and doesn’t feel like he overspent on the planes.
“I didn’t buy new planes. I inexpensively fixed them up,” he said. “I was feeling it out. I didn’t know if I wanted to keep it. . . . I was able to make a pretty good deal.”
. . .
Trump wasn’t involved in the day-to-day management of the Trump Shuttle. But he often weighed in on decisions around brand. He was very aware that it was his name on the airplanes.
“There were plenty of times where he would use the line, ‘It’s the Trump Shuttle, not the Harteveldt Shuttle,’ ” Harteveldt said. “ ‘You’re going to do things my way.’ ”
Trump didn’t know the airline industry, but he did know about what high-end clients might want. Few details were overlooked, from a concierge waiting at airline terminals, to helicopter rides from the financial districts of New York or Boston, to thank-you letters on Trump-branded stationery signed with an autopen that used the same blue felt pen Trump had in his office.
The airline also played on the power corridor during an ad campaign, attempting to illustrate how it attracted a select set of passengers.
One ad starred former House Speaker Tip O’Neill and former Secretary of State Alexander Haig. In television and print ads, the political odd couple appeared together, disagreeing on almost everything except one thing: They liked the Trump Shuttle.
Trump also had a drawn-out argument with the shuttle president over a cross-promotional idea. Trump wanted the airline to hand out casino chips to every passenger, trying to encourage them to go to his casinos in Atlantic City to redeem them.
Nobles said he told Trump repeatedly that the shuttle flight passengers were not typical casino-goers. They were businesspeople. And they wouldn’t make a decision to purchase an airline ticket based on a casino offer.
But Trump was persistent. Nobles relented and approved the distribution of casino chips.
“We gave out thousands to every passenger for a couple of weeks. Guess how many were redeemed? Two,” Nobles said. “Donald’s comment was, ‘Gee, I’m surprised.’ And I said, ‘Well, I’m not.’ ”
. . .
Less than three months after Trump took over the airline, he was sitting in his office one August morning. Some of his shuttle employees, who also worked in Trump Tower, came into his office.
“They came in and said, ‘We have good news and bad news,’ ” Trump recalled in the interview. “I said, ‘Give me the good news.’
‘We have a great pilot in the plane.’
‘Give me the bad news.’
‘The front wheels won’t come down.’ ”
Trump — who weeks earlier had made claims that he would send all of his own planes through X-rays to make sure they were safe — turned on the TV and watched as CNN showed a Trump Shuttle flight circling the air.
After several attempts to jar the nose gear loose, and after circling around to burn fuel, the pilot landed on the back two wheels, slowing the plane down as much as possible before lowering the nose of the plane onto the runway.
“It was the most beautiful landing you’ve ever seen,” Trump said. “It went all the way down the runway. By the time it landed at the end, the front just touched very softly. Everybody got off. Nobody was injured. They were shaken up. But they were fine.”
Trump said he thought to himself, “Welcome to the airline industry.”
Nobles immediately made plans to fly up to Boston, and Trump said he wanted to go, too. Rather than fly his own jet, they both got on the next Trump Shuttle flight.
“He was kind of a nervous flier,” Nobles said. “He said, ‘Is this safe?’ I said, ‘Of course it’s safe!’ ”
Trump helped ensure a day that could have been disastrous instead focused on the heroic work of his employees. He turned a bad story into a good one.
“I really wanted to come here and shake hands with the maestro,” Trump told reporters that day. “I consider him a maestro. It is a great, great day as far as I’m concerned.”
The “maestro” that day, pilot Robert Smith, said Trump had been advised not to come up — so as not to draw attention to the crash — but Trump disregarded it.
“He was very happy with the crew,” said Smith, who after decades in the airline industry called Trump “the best boss I’ve ever had.”
“And I think he was very happy with the exposure he got that day. He handled it beautifully.”
An investigation found that years earlier — and well before Trump took over — a mechanic had used the wrong part in the gear mechanism, and it eventually disintegrated and locked the gear in place.
One of the passengers on that flight — who recalls sliding out the aircraft and into a pile of foam — was Mike Murphy, a veteran Republican strategist who worked for Jeb Bush and his super PAC to try to defeat Trump.
“Afterward,” he said, “all I got was a form letter and a drink coupon.”
. . .
The Eastern Airlines Shuttle flight had been a reliable source of revenue for decades. Since the 1960s, the number of shuttle flight passengers had grown every month, without exception, until November 1989, Nobles said.
It dropped. Then it dropped again in December. A recession was coming. As a result of the Gulf War, the price of oil — and, therefore, jet fuel — had jumped.
The Trump Shuttle was successful enough to cover operating costs but not enough to pay down the debt.
It fit a pattern for Trump: making a bet that his product would be so successful that he could pay down massive debt and earn a hefty profit along the way. It was the model he attempted in Atlantic City, and the one he was also trying to execute with the Plaza Hotel.
“The shuttle was a clear example of how the exaggerated value accorded his name led Donald into a purchase whose foolishness was apparent almost immediately,” John O’Donnell, a former Trump official, wrote in his tell-all book “Trumped!” “But he was acting more impulsively than ever, giving less and less thought to the consequences of everything he did.”
As he was in the midst of some of the biggest professional challenges of his life, he also had personal troubles that were playing out in the tabloids. Trump was going through a messy divorce with his wife, Ivana, and one headline blared that his mistress Marla was telling friends that Trump was the “best sex I’ve ever had.”
“I called him one day and said, ‘You’ve got to get off the front page of the New York Post,’ ” Nobles said. “Businesswomen in particular are insulted by this ‘Best sex I ever had’ stuff. He chuckled and said, ‘Yeah, but the guys love it.’ ”
“But they don’t,” Nobles added. “I had guys tell me they wouldn’t fly on the Trump Shuttle and wouldn’t let anyone else fly there because they didn’t like Donald Trump.”
. . .
About a year after he purchased the airline, Trump began openly discussing selling it. He fired Nobles and laid off 100 employees, which amounted to about 10 percent of the workforce (Trump had also explored having two pilots fly the planes, but Nobles said he was insistent that less than three was unsafe). Free coffee was no longer served in the terminals, and the concierge service was suspended.
Over an 18-month period, Trump couldn’t turn a profit. The Shuttle had lost $128 million.
But Trump did have one thing in his favor: leverage over his creditors. In September 1990, he missed a $1.1 million interest payment and asked the bank to defer future payments.
“One banker told me, ‘He would take down the bank, he owes so much money,’ ” Nobles said. “ ‘We can’t afford him to fail.’ ”
In late 1991, about 2½ years after Trump had purchased the airline, Trump gave up control of his prize in order to get out from a pile of debt.
As part of the deal, Trump was no longer responsible for some $245 million in loans left on the shuttle airline. In addition, out of the $135 million that Trump had personally guaranteed, at least $100 million was forgiven, according to news reports at the time.
Soon after, US Airways began operating the flights, quickly stripping Trump’s name off of everything. US Airways bought the shuttle from the banks in full in 1997, when it was valued at $285 million.
At the end of the day, Trump maintains, he did not lose any money in the venture. And the only lesson he learned, he said, was that he knew when to walk away.
“I got out at a good time,” Trump said in the recent Globe interview. “I walked away saying, ‘I’m smart.’ It’s good to get great financing. . . . I felt successful. The market had crashed. I didn’t lose anything. It was a good thing.”