Eastern Airlines Facing Bankruptcy :: essays research papers

Eastern Airlines Facing BankruptcyIn 1986, Eastern Airlines was in desparate trouble. The fourthquarter of 1985 had shown a $67.4 million loss, and financially expertshad told straight-from-the-shoulder Borman, president and chief executive officer, that theairline had three choices 1) a 20 percent pay cut for all union andnoncontract employees. 2) Filing for Chapter 11 (bankruptcy) or 3) Sellingthe airline. On February 23, 1986, Easterns board of directors met to decidethe fate of the company.hotdog Borman, quickly left his home in Coral Gables to Building 16at Miami International Airport that Sunday evening, to discuss plans on savingthe airlines. The board of directors had set for dinner followingafternoon session and was scheduled to convene at 730 p.m. At the earliermeeting, Wayne Yeoman, senior vice president for finance, had spent most ofthe time outlining the details of Texas Airs offer to buy Eastern. FrankLorenzo and Frank Borman had been talking since December originall yabout consolidating the computerized reservation systems, then , asEasterns problems deepen, about a possible sale.As Frank entered his office, he found his his loyal excutive assistantWayne Yeoman and Dick Magurno, Easterns senior vice president for legalaffairs. For about 20 minutes the three discussed the fourthcoming meetingand the prospects for saving the airline. Negotiations were going to keep downaround for ALPA and TWU but no break from the IAM. The IAM would not budgesince Charlie Byran, head of the machinists union, stood firm against a 20percent wage cut.At 730 the board meeting began with the discussion of the Texas Airoffer, concentrating on some of the conditions attached to the buying of thecompany. More talk and hours dragged on. Finally word got out that ALPA wasnearing an agreement. The meeting recessed for an hour.During the recess Frank needed to get Charlies surport on the 20percent pay cut, otherwise the company was going to sold. He told Charlie tocome up to his office. Frank told Charlie, " weve been at this since 83 andyou have to recognize it cant go on. I have every reason to believe that thepilots and flight attendants are going to give us what we need. I know itsmore difficult for you because your contract is not open. But I know youhave a sense of history. We have a very ripe opportunity to cure this airline,and if you just understand this, in the long run youll come out a stronger,more admirable person. Choose the harder right sort of of the easier wrong, and