History is littered with the carcasses of dead companies due to labor unrest. Eastern Airlines comes to mind in aviation.
Labor unrest of any kind can strangle an operation, drive cost up, productivity and customer service down.
Sure labor unrest had a part in Eastern's demise but to place all the blame on it is utterly ridiculous and simplistic
Just as it would be to blame US Airway's possible doom on just labor unrest.
What causes labor unrest? It just happens?
Eastern did not fare well in the 1980s. Under Borman's shaky command, the company was in deep trouble as a result of major disagreements between management and the labor unions, and also because of major debt from purchases in the late 1970s. As Borman ineffectively tried to get pay cuts to compensate for debts, Eastern began to rack up year after year of losses until late 1985, when it had a debt of $3.5 billion. It was at this point that Frank Lorenzo, the infamous airline powerbroker who controlled Continental Airlines, stepped in. After Borman failed to get any significant concessions from his trade unions, Lorenzo bought the whole airline for only $615 million, adding Eastern to his existing prizes of People's Express, Frontier Airlines, Texas Air, and New York Air.
Lorenzo was ruthless in using Eastern's core assets for his other airlines, devising various ways to use them to make money for his other properties. He let Texas Air “purchase†Eastern's advanced reservation system but issued only an I.O.U. for it. Eastern then had to pay Texas Air a monthly fee of $10 million to use its own system. He “sold†six of Eastern's planes to Continental but paid nothing for them. The result was that, to survive, Eastern had to sell off aircraft and lay off workers in large numbers. As tensions mounted between the labor unions and Lorenzo's harsh tactics, Lorenzo slowly began to dismantle Eastern and sell off its parts. When the unions struck in March 1989, Lorenzo filed for bankruptcy. This gave him some breathing room and allowed him to use strikebreakers to continue operations. By this time, however, Eastern was collapsing under its debt, and finally in January 1991, the airline completely ran out of money to operate. In late 1991, the airline was liquidated. Thus ended the life of one of America's greatest domestic airlines.
Eastern
—Asif Siddiqi
