Eastern Airlines Facing Bankruptcy

Title	Eastern Airlines Facing Bankruptcy
# of Words	1193
# of Pages (250 words per page double spaced)	4.77

Eastern Airlines Facing Bankruptcy

Eastern Airlines Facing Bankruptcy

      In  1986, Eastern Airlines was in  desparate  trouble.  The fourth
quarter  of  1985 had shown  a  $67.4  million  loss,  and financially  experts
had told Frank Borman,  president  and  chief executive  officer,  that the
airline had three choices:  1) a  20 percent  pay  cut for all union  and
noncontract  employees.   2) Filing for Chapter 11 (bankruptcy) or 3) Selling
the  airline.  On February 23,  1986, Eastern's board of directors met to decide
the fate of the company.

      Frank  Borman,  quickly  left his home in  Coral  Gables  to Building 16
at Miami International Airport that Sunday evening, to discuss plans on saving
the airlines.  The board of directors  had recessed for dinner following
afternoon session and was  scheduled to  convene at 7:30 p.m.   At the earlier
meeting,  Wayne  Yeoman, senior  vice  president for finance,  had spent most of
the  time outlining the details of Texas Air's offer to buy  Eastern.  Frank
Lorenzo   and  Frank  Borman  had  been  talking  since   December originally
about  consolidating  the  computerized   reservation systems,  then ,  as
Eastern's problems deepen,  about a  possible sale.

     As Frank entered his office,  he found his his loyal excutive assistant;
Wayne Yeoman;  and Dick Magurno, Eastern's senior vice president  for  legal
affairs.  For about 20  minutes  the  three discussed  the fourthcoming meeting
and the prospects  for  saving the airline.  Negotiations were going to come
around for ALPA  and TWU  but  no break from the IAM.  The IAM would  not  budge
since Charlie Byran, head of the machinist's union, stood firm against a 20
percent wage cut.

    At  7:30 the board meeting began with the  discussion  of  the Texas Air
offer,  concentrating on some of the conditions attached to  the  buying of the
company.  More talk and hours  dragged  on. Finally  word  got out that ALPA was
nearing  an  agreement.  The meeting recessed for an hour.

       During the recess Frank needed to get Charlie's surport  on the 20
percent pay cut,  otherwise the company was going to  sold. He told Charlie to
come up to his office.  Frank told  Charlie,  " we've been at this since 83' and
you have to recognize it can't go on.  I  have  every reason to believe that the
pilots  and  flight attendants  are going to give us what we need.  I know  it's
more difficult  for you because your contract is not open.  But I  know you
have a sense of history.  We have a very good opportunity  to cure this airline,
and if you just understand this,  in the  long run you'll come out a stronger,
more admirable person. Choose the harder right instead of the easier wrong,  and
let's go  forward." With  this Charlie replied,  "Frank you don't understand
that  you are just trying to run the company down and I can't go along  with
that.   With this, Frank gave up and told Charlie to wait outside. He  tryed
everything he could to get Charlie's  support  but  all attempts failed. This
was going to be the end of Eastern Airlines.

     The board meeting finally reconvened at 10:30,  an hour an  a half away
from the deadline. Word had reached that ALPA reached an agreement  and  TWU
negotiations were still up  in  the  air.  The directors heard analysis of the
Texas Air offer by representatives of Saloman Brothers and Merrill Lynch, at
this point Charlie Bryan finally spoke up.  He said, "I've had discussion with
the chairmen of the audit and finance committees,  and would like the board  to
be  informed what we talked about."  Two of the  directors,  Harry Hood  Bassett
and Peter Crisp,  told Charlie to reconsider in  the view  of  the  57 years of
the airline,  and  the  fact  that  his decision  would  impact all the
company'...

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