As head of Texas International, Lorenzo was interested in expanding his network of air routes. Deregulation presented him with the ideal opportunity. Non-union airlines like People's Express sprang up, offering drastically reduced air fares - prices that the larger, unionized airlines couldn't compete with. As airlines began faltering, Lorenzo systematically began acquiring the likes of Continental Airlines, New York Air, Frontier Airlines, and Eastern Airlines. Lorenzo's company soon became the nation's largest airline. Lorenzo often drew ire for what his critics called harsh business practices.

After Lorenzo filed for bankruptcy at Continental, he was able to fire all union employees. Airline employees protested his actions.

At Continental, Lorenzo was unable - some would say unwilling - to negotiate any further with the airline's labor unions. Lorenzo filed for bankruptcy. The move allowed him to fire union employees and restart the airline with a non-union staff. He cut wages in half and forced new rules requiring longer hours, shorter breaks, and no guaranteed time off. The unions protested, but were unable to have Lorenzo's actions overturned.

Lorenzo's cost-cutting measures did eventually help the airline get back on its feet and starting making a profit. But some claim Lorenzo's harsh methods also wreaked havoc. Employee morale was low and Continental's reputation suffered from poor customer service. Critics charged that Lorenzo was only interested in buying up struggling airlines in order to takeover their assets. His credibility damaged, Lorenzo sold his investments in Continental Airlines.

When Lorenzo acquired Eastern in 1986, he hoped he could employ similar business strategies in order to turn the airline around. When Lorenzo asked machinists to take a cut, the union refused. The union called for a strike, crippling the airline and putting Eastern further in the hole.

Eastern's creditors sued causing a U.S. bankruptcy court to intervene. The court eventually ruled Lorenzo was unfit to run the airline. Eastern was permanently grounded in 1991. Two years later, Lorenzo tried to start another airline, named Friendship, but the U.S. Department of Transportation denied his attempt.