The Battle for Eastern Airlines

[GogglesPisano]

That was a thoughtful, articulate response, Sacha. It seems my initial comparison was a stretch, and the result of my partisanship.

I agree that Romney is no Lorenzo. Same business, but different ethos.

 

[Dan Roman]

It really wasn't that complicated. Initially Lorenzo actually wanted TWA much more than EAL. So did Icahn. The TWA unions and Mgt. figured they would have a better time playing ball with Icahn so they threw in with him. Lorenzo went after Eastern as Plan B. either way his plan was to strip them or us (EAL) clean, move the valuable parts to Continental. CO was struggling, but Non-Union.

Borman was butting heads with the Unions although mostly with Charlie Bryant and the IAM. Lorenzo made Borman an offer he couldn't refuse. He got his revenge in a way.
The truth is Borman was not a very effective Leader. He made some big errors but the airline was still profitable. The key is as employees, we lost our trust in him. Was it a Union thing? I don't believe so. SWA is the most heavily unionized airline in the country. Losing trust in management and vice versa crosses a line that doesn't care if you are union or non-union

In the end, all the employees knew that we had to stick together as a group rather than each Union trying to fight Lorenzo one at a time. He was steadily bleeding and dismantling us piece by piece no matter what we did. The IAM 's contract just happened to come up first so we all honored their picket line. If the Pilots contract had expired first, I am sure we would have been painted as the bad guys like Charlie Bryant and the IAM were. The end results would have been the same.

I believe it was a no-win situation. Would we be still around if Lorenzo had gotten a hold of TWA like he originally wanted? I would like to say yes, but I am a realist. I passed through two more Legacy carriers before coming to Southwest. Eastern had some entrenched Legacy thinking and behavior prior to Lorenzo. I believe we would have ridden the roller coaster throughout the late eighties and into the 90's and 9/11 like everyone else. I am not so naive to believe we were any smarter or better than the employees of Pan Am,TWA, Usair, United, Delta, or Continental, Northwest, American, all of which who have gone into Bankruptcy
at least once or have disappeared.

The 80's and Corporate Raiders like Lorenzo and Icahn was like being caught in a game of Whack-a-mole. Continental, EAL and TWA got whacked. Hopefully those days are gone but different issues are in their place. Will SWA suffer the same fate. Statistics and Mathmatics say they will. I give the odds of SWA facing similar circumstances at better than 50/50 before I retire. Not a pessimist. Just a realist.

I actually followed Bain stories in the 80's partly because I lived in Boston. Even in the heyday of Corporate Raiders and hostile takeovers, I never put Bain and the likes of guys like Icahn and Lorenzo in the same category. Not even in the same Universe. Years later I married an Investment Banker. My wife said that Bain and Romney are held in high regard throughout the Banking industry. That says a lot for an industry that can be very high pressure and have the egos to with it. I have asked a lot of the higher ups at my wife's company what they think of Romney and the universal answer is "a smart, kind and decent man". Many of these Bankers are Democrats and voted for Obama.

Thanks, nice summary. You confirmed what I thought about Borman from that show. He appeared to not be an effective leader. Seems to me as soon as he saw how well working WITH labor paid off he would have stuck to that game plan rather than come after them again as soon as they had a bad year.
May be really reaching, but you have to wonder if the foundation for labor trouble started with Rickenbackers totalitarian "I'm the boss everyone else is a peon" attitude and than Borman failed because he too had a similar attitude towards "workers". Pretty much the polar opposite of what made SWA succeed.

Anyway, thanks for the post, websites like this are a lot better when pilots different backgrounds yield good insights.

 

[Sacha]

Everyone uses Investment Bankers. If you want to build a Hospital, a retirement community. A Solar energy company. An Airline, doesn't matter. If it is large enough and it needs funding, you need the Investment Bank to arrange the funding from the Investors, either the Institutional market and/or the Retail market. They also try and save many companies. Legitimately. They also expect a return on their investment. Who wouldn't?

Lorenzo, Icahn, Milken and others used the system without regard to who they hurt. In my opinion, the percentage of individuals like them are small.

The alternative is to put Government in charge of all industries and their creation. Having spent a fair amount of time in the former Soviet Union, East Germany and other Eastern Bloc countries after the breakup, I am quite certain I don't want to go there. Deadheading on Aeroflot almost made me long for Lorenzo's maintenance practices.

Sorry. I didn't mean to call you an Idiot.

 

[NuGuy]

..................

 

[Aeronca123]

I referenced YIP because he likes to blame the unions for Eastern's demise.....As can be clearly seen by the video, management screwed the UNIONS....

But what, that can't be true, its MAIN STREET media...LOL

 

[Fly Astar Jets]

Deregulation Act of 1978:

:Concieved by Alferd Kahn, a neo-liberal professor from Cornell and chairman of CAB 1977.

:Introduced as "Senate Bill S. 2493" by Senator Howard Cannon (D) Nevada

:Signed into law 1978 by President Jimmy Carter (D)


Braniff CEO, Harding Lawrence theorized before the Act was implemented that after a multitude of bankruptcies and mergers there would only be two or three major carriers and a very small number of medium and local service airlines.


Thanks to a bunch of "Jacka$$'s" this is the state of the industry today.

 

[BobbyBiplane]

I referenced YIP because he likes to blame the unions for Eastern's demise.....As can be clearly seen by the video, management screwed the UNIONS....

But what, that can't be true, its MAIN STREET media...LOL

Nice try junior. I was at Eastern. We (all employee groups) screwed ourselves.

Bob

 

[HalinTexas]

I don't believe Frontline is the definition of in-depth investigative journalism. They frequently take the viewer in one direction, stop, then move over to a different conclusion. Their production values are top-notch.

Having said that, and to make it relevant, what were Borman's choices? He capitulated to much of the demands of labor by getting them more involved, but they still were bleeding money. Fast. If he had not sold out to Lorenzo, what were his choices? Frontline leads you to believe, via their misdirection, that EAL was doomed to liquidation if labor did not concede to cost demands.

 

[Count Dracula]

Borman was hired as a PR figurehead due to his NASA celebrity. Operating an airline with employee groups that have the ability to disagree versus a military culture where you follow orders does not mix....."we can't have the monkeys running the show".....that's all you need to know about Borman's management style so he decided to sell to the biggest prick that was left standing...Uncle Frank II.

 

[Bugs]

My memorys of Eastern

All:

My memory of Eastern is rather fond now at this late date. I agree with Sacha.

That first year there was the best time I ever had, Jan.85 till Dec. In Dec. the annual Christmas crisis came around again, the first for me, but there had been many in the past. It felt like such a let down because the airline had been running so smoothly, or so it seemed. It was all down hill after that.

Borman was as you say, a career military man who did not like getting bad news. For balance, you should know that he never thought Eastern would be sold to Texas Air. I spoke with him at an airshow some years back. He was trying to use Lorenzo as a hammer on ALPA. He was as devastated as the rest of us that morning when we all read in the news what had happened. In the end, he was betrayed along with all of us by the board of directors who voted to sell it to Texas Air in the middle of the night. He told me it had been the lowest point in his life. The Frontline program, did it mention the "Chunks Memo"? It was a letter that surfaced from the board that proscribed the sale, the fix, or the junking of the airline.

Eastern was a great experience for me, I met so many great people. One guy I knew flew A1's and got a cold cat shot one night in the Med.. He got out, was pushed aside by the boat, did not drown, and was found the next morning by another Navy ship! That's at least three miracles . Shawn, if you are out there, that was your Dad, Pat, I'm so proud to have known him and so many others. Jim who flew all over North Vietnam in a Queenair listening for Charlie, and Ed, over a 100 missions in a Thud over the north country, the list is a mile long. I was just a kid when I got there, all these guys took me in and treated me as an equal, I was one of them. I was a midget among giants. I'll never forget them, I'm blinded by tears now.

Bugs