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.
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
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...