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 ...

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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 ...

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PAPER DETAILS
Added: 12/26/2003 02:38:07 PM
Category: Economics
Type: Premium Paper
Words: 1250
Pages: 5

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