From Corporate Counsel
How good a businessman is Donald Trump? Not very, according to Ben Hirst, the former general counsel of Continental Airlines who watched him up close during Trump’s purchase of the Eastern Air Lines shuttle in 1988.
Hirst wrote a commentary piece in Thursday’s Minneapolis Star Tribune that says Trump was all ego and emotion, and “was desperate for the deal.” So he badly overpaid. Then he renamed it the Trump Shuttle.
At the time Texas Air Corp. owned both Continental and Eastern, and Hirst says he was part of the legal team that handled the deal.
“Sensing that Trump was emotionally driven to acquire high-profile New York assets, Texas Air priced the shuttle at $400 million, twice what it was worth,” Hirst writes. “When Trump came back with a $300 million counteroffer, I advised Eastern’s general counsel, Barry Simon, who was leading the negotiation, to take it quickly, before Trump did the analysis that would show he was still overpaying by $100 million.”
But the negotiator sensed Trump’s desperateness to make the deal. “Barry … told Trump that we were insulted by his offer and were terminating the discussions. Trump quickly raised his bid to $365 million, which we accepted.”
Hirst says the $365 million was more than three times the value allocated to the shuttle when Texas Air acquired it two years earlier, and about $150 million more than its revenues could support at the time. Trump defaulted on the loans two years later and turned the shuttle over to the banks, which sold it in 1997 to US Air for $285 million.
The deal, Hirst suggests, “sheds light on the kind of president Trump would be,” in contrast to the Republican presidential nominee’s repeated bragging about his financial success and business acumen. Hirst went on to become general counsel for Delta Airlines, and is now retired and living in Woodland, a small town on Lake Minnetonka, near Minneapolis.
