Hard Landing: The Epic Contest for Power and Profits That Plunged the Airlines Into Chaos by Thomas Petzinger & Thomas Petzinger Jr

Author:Thomas Petzinger & Thomas Petzinger Jr. [Petzinger, Thomas & Petzinger, Thomas Jr.]
Language: eng
Format: epub
Tags: History, Non-Fiction, Business
ISBN: 9780307774491
Publisher: Times Business
Published: 1995-01-01T00:00:00+00:00

Frank Borman was beside himself with anguish and frustration. He had spent his adult life operating within a chain of command, much of it with himself at or near the top. But the command structure of Eastern Air Lines had suddenly been inverted. Now the workers were in control, like “monkeys running the zoo,” he thought.

The Colonel’s misfortunes were rooted in the 32 percent settlement he had awarded the machinists to keep Charlie Bryan from leading a strike. Eastern’s bankers, perceiving no irony in the situation, were so outraged at Borman’s capitulation that they moved to restrict his credit lines even further, even though it was their refusal to release cash under those same credit lines that caused Borman to cave in the first place. The combination of swelling costs and tightening credit threw Eastern into a genuine cash flow crisis.

Borman was in the midst of this drama on the day that Frank Lorenzo put Continental into Chapter 11. Within hours Borman was in a video studio at company headquarters in Miami, peering into a lens and grimly demanding immediate pay cuts of 15 percent. Without them, he warned, Eastern might very well file for bankruptcy, “à la Continental,” or liquidate altogether, “à la Braniff.” Eastern executives fanned out through the system, distributing Borman’s videotaped bankruptcy threat.

Once reported by the press, the bankruptcy threat did less to intimidate Eastern’s employees than to frighten its customers. The Continental Chapter 11 filing had burned thousands of passengers, travel agents, and tour operators, just as the Braniff bankruptcy had. Nobody was eager to be the third cigarette on the match. Practically overnight Eastern passengers redeemed some $2 million worth of individual tickets. Miami-based cruise lines that provided airline tickets to their customers abandoned Eastern. By threatening bankruptcy Borman had only worsened the cash flow crisis. At Eastern’s hub in Atlanta, the machinists hired a skywriter who filled the air with the message “Frank Borman, Resign Now”—not as arresting as “Surrender Dorothy,” perhaps, but a startling message just the same.

In this round of BOHICA—“Bend over, here it comes again”—the unions were in a better position than ever to demand something in exchange for their concessions. Randy Barber, who had once joined with a band of French unionists that had seized control of a watch factory, helped to structure an extraordinary range of ownership concessions by the company. Eastern employees received shares in Eastern Air Lines equivalent to 25 percent of the company’s equity. Their unions won complete access to the company’s internal financial reports any time they wished to examine them. Budgets, spending authorizations, fleet planning—the blizzard of confidential paperwork that drifted through any major corporation—all now passed through the hands of Charlie Bryan, his colleagues in the other unions, and all of their aides, minions, advisors, and hangers-on.

On top of all that the unions had been awarded three seats on the Eastern Air Lines board of directors, the fulfillment of a dream for Charlie Bryan. Joining him on the board was Robert V.

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