Wrong, all unions, IAM, ALPA and TWU struck eastern at the same time, ask yourself why?
Ask yourself why Lorenzo is the only man in the US who is banned from owning or running another airline?
Ask yourself why Lorenzo is the only man in the US who is banned from owning or running another airline?
In 1983, Eastern became the launch customer of Boeing's new aircraft, the Boeing 757, which was ordered in 1978. Borman felt that its low cost of operation would make it an invaluable asset to the airline in the years to come. However, higher oil prices failed to materialize and the debt created by this purchase coupled with the Airbus A300 purchases made in 1977 proved to be a millstone around Eastern's neck, contributing to the February 1986 sale to Frank Lorenzo's Texas Air. At that time, Eastern was paying over $700,000 in interest each day before they sold a ticket and fueled or boarded a single aircraft. Borman claimed these purchases constituted "fleet modernization" rather than expansion, but Eastern's system growth during his tenure belies this assertion.
Competition: quality versus price
Eastern began losing money as it faced competition from no-frills airlines, such as People Express, which offered drastically reduced air fares. In an attempt to differentiate itself from its bargain competitors, Eastern began a marketing campaign stressing its quality of service and its rank of highly experienced pilots.
Sale and decline
July 2, 1988, Eastern Air Lines employee timetableUnable to keep up, Borman agreed to the sale of the airline in 1986 to Texas Air, led by Frank Lorenzo. Lorenzo (who was named as one of Time Magazine's 10 "worst bosses of the century") was known as a ruthless corporate raider and union buster. He had already purchased Continental and lost a bidding war for TWA to Carl Icahn.
Although Eastern's employees saw Lorenzo at the time as a savior, he would prove to be anything but a hero to the employees by the end of the decade. This event is widely seen as the beginning of the unwinding of the company, and the beginning of a steep decline into a period that saw strikes, empty planes, mass layoffs, bankruptcy, and eventually a ceasing of operations.
Labor relations: strikes and canceled service
Under Lorenzo's tenure, Eastern was crippled by severe labor unrest. Asked to accept deep cuts in pay and benefits, Eastern's mechanics and ramp service employees, represented by the IAM (International Assn. of Machinists and Aerospace Workers), walked out on March 4, 1989. A sympathy strike called by the pilots represented by ALPA (Air Line Pilots Assn.) and flight attendants represented by TWU (Transport Workers Union) effectively shut down the airline's domestic operations. Non-contract employees, including airport gate and ticket counter agents and reservation sales agents, did not honor the strike. Due to the strike, flights were canceled, resulting in the loss of millions of dollars in revenue.
Dismantling the airline
Lorenzo sold Eastern's shuttle service to real estate magnate Donald Trump in 1989, under whom it became the Trump Shuttle, while selling other parts of Eastern to his Texas Air holding company and its major subsidiary, Continental Airlines, on disadvantageous terms to Eastern.
Bankrupt
As a result of the strike, weakened airline structure, inability to compete after deregulation and other financial problems, Eastern filed for bankruptcy protection on March 9, 1989. This gave Lorenzo breathing room, and allowed him to continue operating the airline with strikebreakers. When control of the airline was taken away from Lorenzo by the courts and given to Marty Shugrue, it continued operations in an attempt to correct its cash flow, but to no avail. With the airline collapsing from debt, it ran out of money to operate on January 18th, 1991 following the run-up to the Gulf War. Over 18,000 employees lost their jobs and pensions in one day, not including the thousands laid off or furloughed prior to the collapse.
An asset liquidation sale was commenced later that year and provided Eastern's creditors with a remarkably good payout.