Soaring with Eastern Part 2: Dark Clouds and Silver Linings.

eal5Eastern Air lines Lockheed Constellation.

After World War II, Eastern Air Lines developed into an even more powerful airline with an unmatched safety record; it had been operating as an airline for more than 25 years without a single passenger fatality. It was undeniably the most significant airline on the East Coast of the United States. In the 1950’s competing airlines began procuring jet airplanes, but Eddie Rickenbacker was unwilling to adapt. He favored propeller planes like the Lockheed Constellation. The advent of jet airliners such as the de Havilland Comet, Boeing 707, Douglas DC-8 and Convair 880, rendered the piston-engine Constellation obsolete.

The early 1960s were turbulent for Eastern. The Civil Aeronautics Board opposed regulated monopolies, which denied Eastern revenues it could have made from the launch of exclusive rights to specific routes. Eastern’s main airplane, the Electra, crashed numerous times, diminishing customer confidence in the airline. There were also two consecutive labor strikes which significantly affected the airline’s profits. After nearly a quarter century leading Eastern, Rickenbacker retired on December 31, 1963.

One year later, American businessman and pilot Floyd Hall was hired as chairman and chief executive of Eastern. In order to improve the airline’s image and profits, Hall implemented a new corporate strategy named “Operation Bootstrap.” Hall’s business plan involved four goals: improving on-time performance, upgrading customer service, eliminating expenses, and improving the airline’s corporate image. In order to meet these objectives, Hall offered $100 in Green Stamps to employees who fulfilled any of his goals. The program was so successful that the company turned a $30 million profit in 1965.

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Floyd Hall (pictured in the center) at the Golden Anniversary of the first regularly scheduled commercial flights. Photo courtesy of the Florida State Archives.

During the 1970s, a combination of the fuel crisis and electronic issues with a type of new plane nearly propelled Eastern into bankruptcy. The Lockheed L-1011 Tri-Star aircraft was a costly plane with engines that were prone to breakdown, causing numerous cancellations and flight delays. These setbacks triggered a loss of millions of dollars for the airline.

In December 1975, former Apollo astronaut Frank Borman became Eastern Air Lines’s CEO. That same year, Borman negotiated a wage freeze with Eastern employees. Borman’s salary restriction, which he referred to as the Variable Earnings Plan, tied employees’ salaries to the company’s profits. The next four years proved to be the most profitable in the company’s history. Unfortunately, Eastern’s pinnacle would enviably lead to its demise.

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Fight attendants Carlos Viera and Teri Cleghorn model new uniforms in front of an Eastern Air Lines 727-200.

Eastern experienced considerable financial hardships in the 1980s as a result of major disagreements between management and the labor unions. Borman attempted to negotiate pay and benefits cuts to compensate for its losses. Yet, Eastern continued yearly losses until late 1985, when its total debt reached $3.5 billion. Several major investor groups approached Eastern, including Texas Air, which owned Continental Airlines. Unfortunately, Colonel Borman failed to get the required concessions from his trade unions. In March 1986, Texas Air, owned by Frank Lorenzo, bought Eastern for $615 million.

During Lorenzo’s tenure, Eastern suffered due to severe labor turbulence. Employees were asked to accept substantial cuts in salaries and benefits. On March 4, 1989, Frank Lorenzo locked out Eastern’s mechanics and ramp service employees, and the outcome resulted in all unionized Eastern employees going on strike. Due to the strike, weakened airline structure, high fuel prices, and other financial problems, Eastern filed for bankruptcy protection on March 9, 1989. This permitted Lorenzo to continue operating the airline with non-union employees.

Control of the airline was eventually taken away from Lorenzo by the courts and assigned to Martin Shugrue, whom Mr. Lorenzo had fired before from his former position as president of Continental Airlines. Eastern continued operations in an attempt to correct its finances, but to no avail. On January 19, 1991 the last Eastern flight landed in Fort Lauderdale-Hollywood International Airport.

Now, after being closed for nearly two decades Eastern Air Lines has been re-launched. An association of airline managers bought the intellectual property rights to the Eastern name in 2011, and co-owner of the Florida Panthers Vincent Viola became major primary shareholder for the new Eastern. The airline plans to add 20 new planes to their fleet and will soon begin charter flights to the Caribbean, Mexico and northern portions of South America.

-Ursa Gil

Additional Resources:

Zainaldin, Jamil S. “Eastern Air Lines.” New Georgia Encyclopedia. 05 June 2014. Web. 11 March 2015.

Russell, David Lee. Eastern Air Lines: A History, 1926-1991. N.p.: n.p., n.d. Print.

All photos (with the exception of Golden Anniversary of the first regularly scheduled commercial flights) courtesy of the Wolfson Archives.

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