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The Return of Eastern Airlines: Color us Skeptical.
Posted by Matt Phillips
AP Photo/Jennings
[FONT=Arial,Helvetica,sans-serif]Eastern jets at their Miami Maintenance facility in July 1990. The carrier ceased operations in January 1991.
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Will Eastern Airlines, the major U.S. carrier that ceased operations in 1991 amid labor strife and bankruptcy, be revived?
There have been a few rumors on the Web about bringing Eastern Airlines back as an honest-to-god carrier. Today, travel newsletter Tripso writes that “a group of former Eastern Airlines employees and an investor group are exploring the rebirth of Eastern.” Tripso’s Charlie Leocha writes:
The combination of the bad economic conditions and tough financing would likely make starting — or reviving — a carrier an unlikely proposition at the moment. But with Wegel’s background in airline financing, maybe he knows something we don’t.
Here’s what Mesa Air Group had to say about Wegel when it named him as a new senior vice president of corporate planning in February 2004:
Posted by Matt Phillips
[FONT=Arial,Helvetica,sans-serif]Eastern jets at their Miami Maintenance facility in July 1990. The carrier ceased operations in January 1991.
[/FONT]
Will Eastern Airlines, the major U.S. carrier that ceased operations in 1991 amid labor strife and bankruptcy, be revived?
There have been a few rumors on the Web about bringing Eastern Airlines back as an honest-to-god carrier. Today, travel newsletter Tripso writes that “a group of former Eastern Airlines employees and an investor group are exploring the rebirth of Eastern.” Tripso’s Charlie Leocha writes:
In a letter circulated to former Eastern Airlines employees, an investor group announced that they have “concluded a deal with the Eastern Airlines estate to acquire the name, trademarks and affiliate names (including Eastern Express and Eastern Shuttle) for the purpose of re-starting the airline as a scheduled airline.”
Ed Wegel, a veteran of the airline world and current CEO of Eastern Airlines, Inc., told former Eastern Airlines employees, “We have developed a business plan for the re-start of Eastern which leverages off of Eastern’s core strengths while using all of the lessons we have learned from all of the start up airlines and the restructuring of all of the legacy carriers over the past 18 years.”
According to this letter, the new airline management will break new ground with contracts with the new Eastern’s crew members and a stock ownership plan that will completely align everyone’s interest in the new company.
This isn’t the first time investors have considered bringing Eastern back from the grave. Back in April 2008, the South Florida Business Journal wrote that the steward of Eastern Airlines’ assets and trademarks signed a deal with a group controlled by Wegel, who at that time, said he hoped to “restart Eastern Air Lines in Miami by summer 2009.” Ed Wegel, a veteran of the airline world and current CEO of Eastern Airlines, Inc., told former Eastern Airlines employees, “We have developed a business plan for the re-start of Eastern which leverages off of Eastern’s core strengths while using all of the lessons we have learned from all of the start up airlines and the restructuring of all of the legacy carriers over the past 18 years.”
According to this letter, the new airline management will break new ground with contracts with the new Eastern’s crew members and a stock ownership plan that will completely align everyone’s interest in the new company.
The combination of the bad economic conditions and tough financing would likely make starting — or reviving — a carrier an unlikely proposition at the moment. But with Wegel’s background in airline financing, maybe he knows something we don’t.
Here’s what Mesa Air Group had to say about Wegel when it named him as a new senior vice president of corporate planning in February 2004:
Ed comes to Mesa with over 18 years of experience in the airline industry. He began his aviation career in 1985 at Eastern Airlines where he worked on the finance, operations and marketing staffs. In 1987 he moved to Shearson Lehman Brothers where he specialized in aircraft finance, working with a number of US and foreign airlines. In 1991 he participated as a co-founder in the start-up of Atlantic Coast Airlines where he served on the board for six years. Ed also served as Senior Vice President-Corporate Finance of Atlantic Coast from 1991 to 1994.
In 1995 Ed led an investment group in the privatization of BWIA, the national airline of Trinidad and served as the airline’s President and Chief Operating Officer in 1995 and 1996. In 1997 Ed participated in the acquisition of Chautauqua Airlines, a regional airline in the US operating for US Airways and served as the airline’s Chief Executive Officer from 1998-1999. Since 1999 Ed has been a consultant to the airline industry working on such projects as advising the trustee in the bankruptcy of Tower Airlines and advising several major investment funds on their airline industry investments.
Wegel is a graduate of the United States Military Academy at West Point and the University of N. Colorado with an MBA in Finance.
Eastern Airlines has something of a mixed legacy. With its roots in an airline founded by World War I flying ace Eddie Rickenbacker, the carrier might be best known for the development of the first shuttle operation back in 1961. But by the time it ceased operations in 1991, it suffered from a succession of problems, including huge debt loads, labor strife, bankruptcy, management issues, the crisis associated with the the first Gulf War and surging oil prices.In 1995 Ed led an investment group in the privatization of BWIA, the national airline of Trinidad and served as the airline’s President and Chief Operating Officer in 1995 and 1996. In 1997 Ed participated in the acquisition of Chautauqua Airlines, a regional airline in the US operating for US Airways and served as the airline’s Chief Executive Officer from 1998-1999. Since 1999 Ed has been a consultant to the airline industry working on such projects as advising the trustee in the bankruptcy of Tower Airlines and advising several major investment funds on their airline industry investments.
Wegel is a graduate of the United States Military Academy at West Point and the University of N. Colorado with an MBA in Finance.
