Eastern Airlines, a Miami mainstay in the air and on the ground, changed forever 30 years ago. On March 9, 1989, the airline filed for bankruptcy.
At the time, it was South Florida’s second largest employer.
The popular Northeast shuttle route was sold to Donald Trump. What was left of Eastern limped along for another two years before it stopped flying in 1991. A startup airlines with the same name and logo of the old Eastern Airlines began service in 2015 and ceased independent operations two years later.
Through the Miami Herald’s archives, here is a look at the events leading up to the bankruptcy and what has happened since.
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Published March 10, 1989
Eastern Airlines, as we know it, died Thursday in U.S. Bankruptcy Court. Some said it was a suicide; others that Eastern was dispatched by out-of-towners. There were 30,000 dependents and many more mourners.
Eastern Airlines was 60 years old and had served its community well.
“I never believed I’d be at a press conference like this today,” said Eastern Chairman Frank Lorenzo, one lightning rod in the fierce storm wrecking the company. “Nevertheless, we are here today to announce that Eastern has filed to reorganize itself, (a situation) brought about by the company’s pilots union.”
President Phil Bakes said he hoped to resurrect the company, but in a much smaller form. Analysts said Eastern, already engaged in a fire sale, was trying to raise cash by selling 10 percent of its fleet.
They said any attempt at revitalization was a long shot.
“We intend to operate our airline, make no mistake about that,” Bakes said after Eastern sought protection from creditors by filing the Chapter 11 reorganization petition in New York. “But the steps that we’ve been forced to take because of the virtual shutdown of the company will also require that we entertain transactions that . . . will provide liquidity and cash resources,” Bakes said.
In other words, he plans to sell chunks of the company.
Bakes and Lorenzo apologized to passengers and to loyal employees for the chaos and heartbreak of this past week.
“The last five days have been the saddest five days of my life,” Bakes said.
South Florida’s second-largest corporate employer, with 10,000 local workers, Eastern has been virtually grounded since the International Association of Machinists, the company’s largest and most intractable union, posted picket lines Saturday after contract talks collapsed.
The company had planned to fly through a strike, but the plans were demolished by a fatal miscalculation: Eastern’s 3,600 pilots surprised management by steadfastly honoring picket lines.
After days of disorder, the airline gave up, canceling all service except on the Northeast shuttle and a thrice-weekly flight from Miami to Latin America.
In a purely legal sense, the bankruptcy petition has no effect on the labor-management battle.
Bakes said Thursday that Eastern was willing to negotiate with its unions, but he also made clear Eastern’s determination to work around the unions, if necessary. He said Eastern hoped eventually to rehire “the majority of employees who were employed last week.”
Eastern’s pre-strike payroll of 30,000 nationwide is down to 1,500. Eastern said it would try to reinstate by Monday limited service from Miami to about a dozen Latin American and Caribbean cities, and very limited domestic service.
The schedule showed about 40 daily flights in addition to the shuttle. Before the strike, Eastern operated 1,040 daily flights. A spokeswoman said the weekend schedule would be flown by management pilots “and others.” Bakes said outside pilots might be hired.
The company refused to say whether pilots and other workers would receive pre-strike wages. Unions not finished The unions said they were more interested in battling Lorenzo in bankruptcy court, attempting to wrest control of the company, than in helping rebuild a schedule.
Because of the bankruptcy filing, customers currently holding Eastern tickets now become creditors of the company; refunds, if any, are likely to take some time. Most airlines said they were still accepting Eastern tickets, but were reassessing their policies. The Miami-based Eastern Airlines Federal Credit Union, one of the nation’s largest, with 130,000 members, said it did not anticipate any liquidity problems.
Bakes suggested that retirees’ pensions would be protected; outside experts said the pensions of newer, nonvested employees might be in jeopardy. Lorenzo, chairman of the Houston-based Texas Air Corp. holding company, said he did not believe the rest of his aviation empire was endangered.
He said Eastern’s assets exceeded its debts by about $1 billion, and investors and debt- holders would be protected. The stock market seemed reassured, at least for now.
Texas Air’s stock gained 37 cents Thursday on the American Stock Exchange to close at $13.50 a share. But Eastern’s union leaders, quaking with fury, said they would train their weapons in coming days on Lorenzo’s mostly nonunion Continental Airlines.
IAM leader Charles Bryan, the most intractable of Eastern’s union chiefs and another lightning rod in this tempest, said Continental might be picketed by his union. He called on the American labor movement and air travelers to “search their consciences” before buying Continental tickets.
Eastern’s striking employees directed nearly all of their anger at Lorenzo.
“I’ve never hated anyone because it takes too much energy, but I hate him,” said Sal Califano, an aircraft inspector in Miami. “This whole fight is against Lorenzo.”
The filing of a Chapter 11 petition gives Eastern a temporary reprieve from bills and debts while the company attempts to renegotiate labor contracts. Chief Bankruptcy Court Judge Burton Lifland in New York and Eastern’s creditors now must approve nearly all of the company’s transactions.
Eastern has agreed to sell the Northeast shuttle to developer Donald Trump for $365 million and already has arranged to sell other assets, including gates and routes in Philadelphia to USAir.
All of those deals could be complicated by the bankruptcy filing. Bakes and Lorenzo said the company’s losses, running at $1.5 million a day before the strike, had swelled to $4 million per day. They said Eastern’s cash reserves dwindled during the strike to about $200 million, not much for a company of Eastern’s size and expenses.
Even as mourners gathered over the deathbed, there was no cessation of the hostility that brought Eastern down. Management blamed labor; labor blamed management.
Internal warfare has raged at Eastern for 10 years while the company has lost $1.5 billion. Lorenzo, appearing publicly for the first time since the strike, said he encountered labor’s enmity from the moment Texas Air bought Eastern in 1986.
Lorenzo and his associates from Houston are regarded as scoundrels by labor because they broke Continental’s unions by filing a bankruptcy petition in 1983.
“I realize that I personally have been made the issue by some, and I’m not going to kid you by saying that some of those efforts have not hurt my family and me,” said the gaunt Lorenzo, his lips set in grim determination. “They have.”
Bakes said pilots were committing “professional suicide.”
“The pilots’ action has forced the bankruptcy filing they say they are prepared for,” Bakes said. “But . . . I wonder, I wonder how prepared the Eastern pilots and their families are for that process. “How prepared can they be whose livelihoods and standards of living and families’ security depend on them flying Eastern’s 200-plus airplanes? How prepared can they be when the giddiness and emotional solidarity wear off and the picket line is no longer the self-deluded battle between good and evil.”
The unions saw it differently. Eastern’s labor leaders had predicted that Lorenzo would use the protection of bankruptcy proceedings to break the unions.
The machinists’ Bryan, a harsh critic of Eastern management since the days of Chairman Frank Borman, was defiant to the end.
“We take no responsibility for the strike — absolutely no responsibility,” Bryan said.
Speaking in a small room, his voice bellowed with indignation.
“This is a Frank Lorenzo strike, absolutely and completely.” Contract talks fell apart when management demanded $150 million in annual wage and work-rule concessions from the machinists — give-backs matching those taken by other labor groups — but the IAM demanded $50 million in raises. Bryan and other union leaders said they remained interested in discussing a possible buyout of the airline by Trans World Airlines Chairman Carl Icahn, one of Wall Street’s most powerful corporate raiders.
Icahn said Wednesday he was interested in reappraising Eastern. 60-year history It all made for a solemn occasion for a company that was born on May 1, 1928, as Pitcairn Aviation, a mail carrier.
Its first landing in Miami came on Dec. 1, 1928, and the carrier has been a fixture in South Florida ever since. Renamed Eastern Airlines in 1938, the company moved most of its management from New York to South Florida between 1973 and 1974.
Borman, a former astronaut and another national hero, completed the transfer two years later. Eastern had been the No. 1 carrier at Miami International Airport and the second busiest carrier at Fort Lauderdale-Hollywood International Airport and Palm Beach International Airport.
But Bakes and Lorenzo made it clear that, whatever should become of a resurrected Eastern Airlines, those days are gone forever.
FOLDING ITS WINGS
Published Jan. 19, 1991
Eastern Airlines shut down late Friday, ending a 62-year run as one of America’s principal air carriers and a decade as one of its most troubled corporations.
Eastern, crippled by airline deregulation, poisonous labor- management relations and a public that no longer trusted the carrier, simply ran out of cash. The airline was losing $2.5 million a day. In the past decade, it had lost more than $2.5 billion. And Martin Shugrue, the court-appointed trustee running Eastern, knew he couldn’t get any more money from the bankruptcy court that had supported the airline since it filed for protection 22 months ago.
Eastern announced at 9 p.m. that it would cease operations at midnight. Most of its 18,500 employees, including about 7,000 in South Florida, have no job today.
“I’m not shocked,” said Willie Mitchell, 50, a baggage agent who has worked with Eastern for 23 years. “We just haven’t had enough passengers to pay our bills. We knew it was imminent; we just didn’t know when.”
Most were notified of the news late Friday. In an electronic message to employees, Shugrue said: “Today I feel like the football player who, after an especially tough loss, commented on that particular day that his team didn’t lose — rather they simply ran out of time. “Time and a combination of events over which we had no control were in the end, simply too much for Eastern to overcome.”
Eastern pilots flew most of the 800 regularly scheduled flights Friday before getting orders to park the silver-and-blue planes at maintenance bases in Atlanta and Miami. One captain in Atlanta, after hearing news of the shutdown, walked off the plane as passengers waited for what they were told was a maintenance problem.
At Miami International, the last Eastern flight departed at 8:45 p.m. to New York’s La Guardia International Airport. It left on time. At Eastern counters, customers lined up, awaiting refunds on tickets for future travel. More than 1,000 employees, including reservation agents and some managers, will keep working to maintain planes and other assets until they can be sold or disposed of.
In Washington, D.C., Eastern notified members of Florida’s congressional delegation of the impending shutdown late Friday afternoon, just in case they were booked on Eastern.
Once South Florida’s pre-eminent corporation, Eastern died of exhaustion from fighting too many battles during the past decade. It borrowed heavily to buy planes in the early 1980s, crippling it with debt. Eastern never developed the transcontinental route system needed to compete in an era of megacarriers. And management and labor never learned to work together.
Even as Eastern was put to its death, union workers put the blame squarely on Frank Lorenzo, the former chairman of Texas Air who acquired Eastern in 1986. Three years later, the unions staged a massive strike that put the airline into bankruptcy and eventually led to Friday’s closing.
“It’s a sad day,” said Charles Bryan, who heads Eastern’s machinists union. “What’s happened is a tragedy. If there’s a lesson to be learned by corporate America, it proves that union busting is bad business.”
Eastern shut down one day after oil prices took their steepest drop ever. The sharp increase in fuel prices caused by the Persian Gulf crisis was the final, fatal, blow. Fuel costs, combined with declining passenger travel last year, made 1990 the worst year in history for the airline industry. But Eastern was less able than its competitors to withstand the losses, and periodic rumors of its imminent liquidation scared even more passengers away.
The decision to shut down the airline was tentatively made Jan. 11 in Bankruptcy Court Judge Burton Lifland’s chambers in New York City, said a source familiar with Eastern’s bankruptcy.
Shugrue told the judge that Eastern was running short of cash but was negotiating with an interested buyer. He then agreed that if he could not bring in a firm proposal to sell the airline by midnight Wednesday, it would be shut down two days later. The proposal never came. An industry source said Shugrue had been negotiating with British Air.
On Thursday, Eastern began planning to shut down. A day earlier, Lifland agreed to give Shugrue enough money to shut the airline down, the source said. A liquidation plan had been drawn up last fall, but few details were available Friday. Shugrue could not be reached for comment Friday evening.
Several creditors failed to return phone calls. Eastern will try to sell its remaining airplanes, routes and airport facilities. A source close to the company said, “We’ve been working on deals, and some are agreed to” but declined to be more specific.
United Airlines has been negotiating to buy gates at O’Hare International Airport in Chicago and at Los Angeles International Airport, as well as takeoff and landing rights at O’Hare. In addition, Delta Air Lines informed the bankruptcy court in early October that it is interested in paying $30 million for about a third of Eastern’s 50 gates at Hartsfield International Airport in Atlanta.
Eastern gradually has been selling off assets since it filed for bankruptcy protection five days after the March 4, 1989, strike by its machinists, pilots and flight attendants.
The airline has lost about $1.3 billion since then, including about $1 billion that Lifland allocated from the bankruptcy escrow account. In November, Lifland gave Eastern $135 million over the objections of the airline’s creditors. It was the first time the creditors had asked Lifland to shut the airline down. He declined.
That was the last time Eastern received cash from the court, and the money is nearly gone.
Sources close to the company said the balance stood at about $40 million in mid- January. But it will take whatever is left and even more to dismantle the airline.
The cost of shutting down Eastern has been estimated at hundreds of millions of dollars — some employees must stay on the payroll while assets are sold. Frank Borman, the former astronaut who ran Eastern Airlines for 13 years, described its collapse Friday as “one enormous tragedy.”
“My heart is wrenching in learning that the end has come,” he said from his office in Las Cruces, N.M., where he moved after resigning from Eastern in 1988. “It’s like a person dying. It’s very sad.
“The real tragedy,” he said, “is the fate of the nonunion people who were so very loyal. No one gave it a harder effort than those people did, and they’re the people who will be hurt the most.”
In early 1986, Eastern’s machinists union refused to go along with Borman’s plea for a 20 percent pay cut. That dispute was the catalyst for the sale of Eastern to Lorenzo’s Texas Air Corp. Lorenzo did little to solve — but much to aggravate — Eastern’s labor problems. He also moved profitable assets from Eastern to his other carrier, Continental Airlines, thereby further weakening Eastern.
Mary Jane Barry, president of the flight attendants union, said: “Eastern management, led by Frank Lorenzo, chose a course of action that guaranteed disaster. Lorenzo’s team improperly transferred millions in assets to Continental Airlines, fired long-term employees and provoked a strike as a final strategy to destroy the work force.”
When the unions joined in a massive strike, the clock began running on Lorenzo’s final days at Eastern, which filed bankruptcy five days later. Thirteen months after that, Eastern’s unsecured creditors convinced the bankruptcy court to replace Lorenzo with Shugrue. Shugrue was an inspirational leader who sought to lure passengers back with a series of frank TV advertisements, in which he starred, and an innovative plan to sell first-class seats for coach fares.
Both raised hopes, but too many forces worked against him.
In his last public appearance before the shutdown, Shugrue told a Washington, D.C., gathering on Tuesday: “Whether we make it or not, our strides have been remarkable.”
Published May 29, 2015
Eastern is back in business at Miami International Airport.
The well-known carrier with the hockey stick logo —- a resurrection of the airline that called Miami home for decades — lifted off for its first revenue flight on Thursday afternoon.
The destination for Eastern flight 3145 was Havana, in partnership with HavanaAir Charters.
Eastern Air Lines announced last week that it had signed an agreement with Miami-based HavanaAir to provide the lift for the operator’s charter flights to Havana, Santa Clara and Camaguey.
The airline’s Boeing 737-800 will fly twice daily to Havana from Miami and weekly to the other destinations, with plans to add service to Cuba from other gateway cities in the U.S. over the next few months. HavanaAir used other carriers in the past but approached Eastern because of its longtime name recognition and newer generation of aircraft, said Eastern president and CEO Ed Wegel.
He said he overheard someone notice the iconic signage and say: “Oh, Eastern? Are they back?”
Henry Harteveldt, travel industry analyst at Atmosphere Research in San Francisco, called the contract a “great win” for Eastern that will give the startup operational experience, revenue — and attention.
“It’ll be good for Eastern in terms of giving it a lot of frequencies, and it’s also a high-profile market,” Harteveldt said. “It’s great visibility for the airline.”
For Wegel, Thursday’s flight (refreshments: soft drinks and plantain chips) represented a milestone in the works since 2007. In the years since, he and his partners have worked to hammer out agreements with the estate of the old Eastern, which ceased operations 24 years ago; raise millions in capital; earn certification from the Federal Aviation Administration; get approval from the Department of Transportation; acquire plans; train the first group of pilots and flight attendants; earn government approval to be a charter carrier; and get the OK from the Transportation Security Administration to go to Cuba.
As he sat in the terminal surrounded by passengers preparing to board, Wegel said Thursday afternoon that he felt “a sense of pride in our people that they put all this together.”
The earlier Eastern — once the largest private employer in Miami-Dade County — filed for bankruptcy protection in 1989 and stopped flying in 1991.
The new airline is not affiliated with the original carrier but acquired its intellectual property; shareholders from the old airline also received rights to buy a stake in the new company.
Eventually, Eastern plans to fly as a scheduled carrier, but the process could take a year once started.
The airline is still in the planning phase now, Wegel said. In the near term, a second 145-seat aircraft is scheduled for delivery next month and will go into service July 1 flying for a “major scheduled airline” still to be announced into the Caribbean from New York and Miami. A third plane comes online in August.
Chris Sloan, editor in chief and publisher of AirwaysNews.com, said Eastern stands out as a charter carrier because its aircraft is newer and more fuel efficient than many of its competitors. And it stands out as a new iteration of an old brand because of its business plan, he said. Unlike other old names such as Pan Am and Braniff that have been brought back to life only to fail again, Sloan said the new Eastern appears to be ramping up in a smart way.
“They’re going to get their operations straight, generate revenue on charters before venturing to scheduled service,” Sloan said. “That, to me, is encouraging that they’re not leaping with both feet in. Virtually everyone else who has resurrected a name has failed at it. They’ve all done it completely differently than Eastern is.”
The company has set up shop at Miami International Airport’s Building 5A, the former Eastern operations center. Community appreciation for the airline was evident in December, when the first aircraft arrived and crowds of politicians and former employees gathered to welcome it with cheers.
In contrast to its December event, which featured Frank Sinatra songs, ice sculptures and historic photos, Thursday’s flight took off without any pageantry. “Enough celebrating,” Wegel said. “Now we need to re-earn our wings.”
Published Sept. 3, 2017
The original Eastern Air Lines holds a special place in the hearts of those who’ve worked, flown or been a part of the Miami carrier over its history from 1926 to 1991.
For a younger generation, though, Eastern doesn’t resonate.
Roland Moore, a former contracts lawyer who worked at Eastern from the 1960s until 1991 remembers walking down a Southwest Airlines jetway two years ago when he saw an Eastern lapel pin on the captain flying the plane he was about to embark on. Moore asked the pilot if he flew for Eastern, who said the pin originally belonged to his father.
A young flight attendant nearby then said she never heard of Eastern.
“We both looked at her and asked how old are you?” Moore said.
After replying she was 21, they both laughed and exclaimed, well Eastern did end 25 years ago.
Now, the physical history of one of Miami’s greatest airlines is coming home. Eastern Airlines Retiree Association has donated a large historical archive to the University of Miami.
Some of the materials include timetables, instruction manuals, publicity materials, maps, photos, uniforms as well as menus and pins. The university plans to eventually put the archive on public display.
Eastern was founded by celebrated World War I pilot Eddie Rickenbacker, whom Miami’s Rickenbacker Causeway is named after. The airline began as a mail carrier based in New York City and over the years was one of the first airlines to promote tourism in Florida.
“Well, first of all Eastern and Pan American created Miami as a tourist destination,” Moore said. “Eddie built this huge red sign on the Hudson Palisades in New York City which read, ‘Come to Miami, the best tourist destination in the winter!’ So Eastern really promoted Miami, Fort Lauderdale and West Palm Beach. We were the No. 1 airline there from probably the late ‘60s to the early ‘80s.”
Michael Zall worked in the airline’s maintenance department from 1979 to 1991 and after all these years he recognizes the nostalgia many still feel for Eastern.
“I believe people still feel like it’s family and they feel like there’s a belonging,” Zall said. “It had a big impact on a lot of people and there was just a lot of great people working there. I just believe it was a great camaraderie everyone had there.”
For other former employees such as Moore and Donna Cole, Eastern helped them get their college degrees while they worked at the company.
Cole worked at Eastern for 38 years in operations, starting as a 17-year-old, but still remembers her early days when Eastern helped pay her college tuition as long as she maintained a “B” average.
“Eastern was my livelihood for such a long time,” Cole said. “I had friends who worked at Eastern for 20 years and after it ended, worked at American for another 20 years before retiring. They told me you just don’t have the same feel as you did with Eastern. It’s something you can’t describe.”
For Moore, Eastern gave him the opportunity to work part-time while he got his degree. The airline even paid for a portion of his tuition at University of Miami Law and Business school.
“Paying for tuition is something that simply doesn’t happen today,” Moore said. “I was eternally grateful and is one of the reasons why I worked at Eastern for some 30 years. It was my career and I loved it.”
Eastern peaked from the 1950s through ‘70s, transporting passengers around the globe during a period many call “the glory days” of flying, Moore said. During this time, flying was a luxury and not nearly the chore it is today.
There were prepared meals from local chefs with a full menu, reclining seats and leg room that would make many of today’s travelers jealous.
“Some of the [airline’s] 747 airplanes introduced to us even had a grand piano and a bar,” Moore said. “It was really a different age.”
Female flight attendants (then referred to as stewardesses) were even required to retain certain measurements on Eastern. For example, flight attendants who were five-feet four-inches tall were required to have a maximum weight of 123 pounds.
“In the early days to be a flight attendant or stewardess it was a very prestigious job,” Moore said. “It was probably harder to be a flight attendant than get into Harvard Law School. They selected one out of 10 applicants who had to be stunning and wear a size 4 dress. They took great pride in their work.”
Eastern flight attendants called themselves the Silverliners, a group that in its heyday had about 4,000 members. Many are still active today.
Moore says it was also a very different customer base back in the day. Male passengers weren’t allowed to fly unless they had on coats and ties. Also, the cost for flying was much higher.
“Today you can fly from New York to Miami for around $100,” Moore says. “Back then, the airfare was $150 and those were in 1960s dollars.”
Eastern’s glory days eventually faded. On Dec. 29, 1972, the airline’s Flight 401 from New York’s JFK Airport to Miami crashed in the Everglades, killing 101 passengers and crew. There were 75 survivors.
In the 1980s, Eastern buckled in large part to airline deregulation and labor disputes under then-company President Frank Borman, the former astronaut.
Zall recalls how he learned of Eastern’s demise from his manager: “In 1991, I wrote up my manager for doing something illegal in aircraft overhaul and presented him a letter of reprimand,” Zall said. “He threw it in the air and said, ‘Didn’t your manager tell you? We’re out of business.’”
Six years ago, Eastern made a comeback, of sorts, based in Miami with charter flights to Cuba, Costa Rica, Dominican Republic, Guatemala, Guyana and Haiti. “In late 2011, a professional group of airline managers acquired the intellectual property of Eastern Air Lines,” according to the revived Eastern’s website.
“They did this with the goal of developing a new business and financing plan for relaunching the airline. The result was the formation of Eastern Air Lines Group Inc.” Eastern’s legacy also lives on through the retiree association — fittingly located next to Miami International Airport — which sends out monthly newsletters to each of its 7,400 members.
This association chose to donate the archive to UM, which also holds the old Pan American World Airways collection, because many wanted the Eastern legacy to remain in the Miami area.
“I was thrilled because I wanted our collection to stay in Florida. It was where the majority of our employees lived and our headquarters was based there,” Moore said.
“I had calls from Purdue, Illinois, Auburn and Texas A&M universities as well as the Smithsonian about wanting the collection, but I knew the right place for Eastern’s history was here in Florida.”