Eastern Airlines Facing Bankruptcy

Title	Eastern Airlines Facing Bankruptcy
# of Words	1929
# of Pages (250 words per page double spaced)	7.72

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 surport 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's employees. They also

reminded

This is ONLY a preview of the article. If you would like to view the entire document, you must subscribe to Academic Library. Please register below now!

Subscribe to Academic Library

When you subscribe to the Academic Library, you get 24-hour access to the online database containing full-text articles written by thousands of scholarly students. For only $8.95 per month, you receive unlimited monthly access to view and download all of our 40,000 articles available online. That is less than the price of one textbook!
This price includes:

24-hours-a-day, 7 days a week unlimited access on any computer with Internet access

Complete access to all 40,000 articles, essays, and research papers

Ability to view and download virtually unlimited number of documents

Ability to browse through perfectly arranged catalog of articles

Superior search and relevancy ranking techniques using Google SiteSearch and our local search engine

Instant access to the online database after registration

You can pay by credit card, checking account. You get instant access after registration:

You will be billed $ 8.95 every 30 days (recurring billing) starting on the day you subscribe.
Your credit card will automatically be renewed for your convenience until you cancel.

If you are already registered, please click here to login.


	Home \| Register \| Login \| FAQ \| Forgot Password \| Privacy Policy \| Disclaimer \| Close Account \| Contact Us \| Logout Copyright 1998-2009 Academic Library. Academic Library is designed only to assist students and researchers in the preparation of their own work. Anybody who use our services are responsible not only for writing their own papers, but also for citing Academic Library as a source when doing so. By accessing and using this page you agree to the Disclaimer. If you wish to cancel your subscription to Academic Library, please click here.