How many of you remember the end of Eastern Airlines? It was not long ago or very far away when Eastern ceased to be. This formerly great airline collapsed and closed its doors on Jan. 18, 1991. Over 18,000 people suddenly lost their jobs and their pensions in one day. That does not include the thousands who were laid off or furloughed prior to the collapse.
Eastern Airlines was one of the four great airlines in the U.S. It began as a mail carrier for the U.S. Post Office in the mid 1920’s. Its first CEO was famous WWI fighter pilot Eddy Rickenbacker. By the 1950s it dominated air service in the very profitable east coast corridor. At one time Eastern provided more air miles than any other carrier. All was well until March 9, 1989, when Congress voted to deregulate the airline industry.
Eastern Airlines was a heavily unionized company. The unions never hesitated to make more and more demands on Eastern, because they knew that the regulators would always raise ticket prices enough to cover the cost of their demands
They were competing head to head with Delta and other airlines who were not so heavily ruled by unions. Both Eastern and Delta has very large operations at Atlanta’s Hartsfield Airport, for example. But when government reduced their regulatory control of the business, each airline was free to set their own ticket prices. Delta and other competitors immediately reduced their ticket prices and started taking business away from Eastern.
Frank Borman, a well known and popular member of the U.S. Astronaut team, was named CEO of the airline and made strong efforts to get control of the company’s runaway expenses. His efforts to gain concessions from the unions was rejected, and in an effort to save the airline, Borman endorsed the sell of the airline to Texas Air owner Frank Lorenzo. A damaging strike by the unions drove the airline into bankruptcy which allowed Lorenzo to continue to operate the line with non-union employees. But a federal judge, acting on behalf of the unions, took control of the airline from Lorenzo and turned it over to Marty Shugrue. But he was unable to solve the labor problems and Eastern closed its doors.
Now, I often refer to the statement that those who refuse to learn the lessons of history are doomed to repeat them. That is why I bring up the sad case of Eastern Airlines. Apparently, the leadership of the United Auto Workers have chosen to ignore the lessons of history. Today, they are refusing to negotiate meaningful salary and benefit concessions to the beleaguered U.S. automotive companies. They are of the opinion that the government would not dare let the big three fail, and that they will be able to force the companies to continue to pay labor expenses that are far out of line with other companies. But they are wrong.
The American people are tired of being forced to rescue big business, big finance and big labor when their greed and arrogance creates financial crisis after crisis. And We the People will no longer accept this raid on our pocketbooks. Congressmen and Senators who support these never ending bailouts will have a real problem being re-elected in 2010, and many of them are beginning to figure that out.
Union intransigence caused the destruction of Eastern Air Lines and the jobs of thousands of union and non-union employees. The same thing is about to happen again. When the big three auto companies collapse and those millions of union and non-union jobs suddenly vanish, the unions will be responsible. Such an event might doom the union movement in America. And American voters and taxpayers will say “good riddance. ”
Frank Gillispie is founder of The Madison County Journal. His e-mail address is email@example.com. His website can be accessed at http://frankgillispie.tripod.com/