Eastern airlines faces bankruptcy

Essay by mike jonesHigh School, 12th gradeA-, October 1988

download word file, 5 pages 4.8

- -

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...