The 1989 Eastern Air Lines strike was a 285-day strike by Eastern Air Lines flight crew in the United States in sympathy with action taken by ground workers for the airline. In early March 1989, the airline began a lockout against mechanics and ramp service employees due to those employees' refusal to accept significant salary and benefits cuts. Shortly after the lockout announcement, the airline's pilots walked off the job, launching a strike in sympathy with the ground employees. The strike would continue until November 1989.
Background Eastern Air Lines was a scheduled airline in the United States, headquartered at Miami International Airport.
In 1986, the airline was purchased by Frank Lorenzo and his Texas Air Corporation. Lorenzo was notorious in the aviation industry for his reputation as a corporate raider and an aggressive union buster, including his use of bankruptcy in 1983 to break a strike by Continental Airlines workers in 1983. According to Air Line Pilots Association archivist Kathy Mauser, Under Lorenzo, Eastern also fired a quarter of its workforce, dropped services to over a dozen cities, and sold the profitable Eastern Air Lines Shuttle to real estate businessman Donald Trump, who used it to create the Trump Shuttle. Janice Castro of Time Magazine wrote that "few labor-management battles in the 1980s have matched in bitterness the feud between Texas Air Chairman Frank Lorenzo and the machinists at Eastern Air Lines."
Prelude At the end of 1987, the collective bargaining agreement between Eastern Air Lines and its mechanists and ramp employees, represented by the International Association of Machinists and Aerospace Workers (IAM), expired without a new agreement after several months of stalled negotiations. During the negotiations, Eastern had demanded significant pay cuts from the employees, including a 15% pay cut for machinists and one-third cut for baggage handlers. The IAM, on the other hand, demanded pay raises for the workers.
After the agreement expired, the federal government's National Mediation Board (NMB) stepped in to begin a mediation process between the two sides, led by Harry Bickford.
On 31 January 1989, after a year of mediation, the NMB declared that it had reached an impasse. After Eastern refused to submit to binding arbitration, the NMB declared that a mandatory thirty-day cooling off period would begin before the union could begin strike action.
Before the end of the cooling-off period, the NMB asked American president George H. W. Bush to appoint an emergency board to review the impasse, driven by fears of the potential wide-ranging impact of a strike. The appointment of an emergency board would have increased the cooling-off period by an extra sixty days. Eastern management denounced the request, with senior vice-president Thomas J. Matthews claiming that it "has the effect of totally undermining the negotiations. Is the N.M.B. trying to create an atmosphere for agreement, or do the bidding of one side?" Bush refused the request, saying that he thought it was unlikely an emergency board would be able to make the two sides reach an agreement, while also warning other transport unions not to engage in actions in support of the strike. United States Secretary of Transportation Samuel K. Skinner pledged that the Bush administration would "not stand idly by while the grievances of a few jeopardize the continued safe and efficient transportation of all."
Strike Launch of the strike On 4 March 1989, Eastern mechanics and ramp service employees, represented by the IAM, walked off the job, launching strike action against Eastern's management. Shortly afterwards, Eastern pilots, represented by the ALPA, and flight attendants, also walked off the job, launching a sympathy strike with the ground crew strike.
Benjamin H. Troemel Jr. and James T. Schultz of the Embry–Riddle Aeronautical University, along with Marian C. Schultz of the University of West Florida, wrote that Lorenzo "had thought he could push ALPA to the limit because they still harbored ill feelings toward the IAM for past wage concession discrepancies and the 1986 sale of the airline. He was mistaken." J.B. Stokes, spokesperson for the Miami local of ALPA, told the press that the Eastern management had "obviously underestimated the solidarity of the pilots."
The strike immediately caused significant disruption to Eastern's flight network, with only thirty-five flights taking off in the first day of the strike, compared to a pre-strike average of 1040.
By the fifth day of the strike, Laurent Belsie and Marshall Ingwerson of The Christian Science Monitor noted that it was "rapidly becoming one of the major strikes of the decade... The campaign almost inevitably will be perceived as a key test for organized labor." According to Kenneth M. Jennings of the University of North Florida, the strike "assumed more national publicity than any other labor dispute since the air controllers' strike in 1981."
Bankruptcy filing On 9 March 1989, Lorenzo announced that Eastern would be filing for bankruptcy under Chapter 11, Title 11, United States Code. Eastern CEO Phil Bakes told the press that the strike "has not only paralyzed our operation and severely inconvenienced customers, but has precipitated a looming cash crisis at Eastern," while Lorenzo stated that he should not be focus of the strike, saying that "the intensive focus on a single person does a great injustice to the real issues that are at stake in airline deregulation and in our business climate today." Pilot and Air Line Pilots Association (ALPA) head Henry Duffy responded by saying that Lorenzo "is much better at filing for bankruptcy than he is at running an airline," while IAM vice-president John Peterpaul accused Lorenzo of taking "vengeance out on the workers who stood up against his atrocities."
Under Chapter 11, Eastern would not have to pay its creditors, allowing it to conserve cash flow, which it could use to hire strikebreaking staff and continue operations. According to author David Lee Russell, Lorenzo's goal in declaring Eastern bankrupt was toRussell, David Lee. Eastern Air Lines: A History, 1926-1991. McFarland, Incorporated, Publishers, 2013. Pages 178-196
Burton Lifland of the United States Bankruptcy Court for the Southern District of New York, who had presided over a number of high-profile bankruptcy cases and had a pro-company reputation, was assigned to the case. Ten days after his appointment, Lifland announced that he considered the appointment of a trustee to be too extreme a step to take and that he would instead be accepting Eastern's management's request to appoint an examiner to study a potential sale of Eastern, naming 1st Amendment lawyer David I. Shapiro. In announcing his decision, Lifland described Eastern as a "national asset" and said that he had a duty to "prevent the often bitterly opposed parochial interests of management and the unions from destroying it."
Failed sale to Peter Ueberroth In late March, American sports executive and Commissioner of Baseball Peter Ueberroth made a $464-million buyout proposal for Eastern. The bid was rejected, however, in the following days, Ueberroth continued to pursue a buyout. On 6 April, Ueberroth announced that Lorenzo had accepted his bid. As part of the deal, Eastern workers would end the strike and compromise on several salary and benefits demands in exchange for a 30% ownership stake in the airline through an employee stock ownership plan. Another significant ownership stake in airline would be acquired by investment groups Drexel Burnham Lambert and Ardshiel.
When news of the potential sale was announced, many Eastern employees celebrated. The Los Angeles Times quoted flight attendant Joan Babcock as saying that "we supported the American worker instead of the American corporation. This shows what happens if workers stick together," and pilot Ken Wolters as saying that "capitalism is what our economy is based on in the free Western world, but that means capitalism with morality, with ethics, not for greed, not for the gain of only man." The Christian Science Monitor quoted pilot Ron Fletcher as saying that, "We're ready to go back to work under someone who is not interested in tearing down the airline. Money is not really the issue. What we want to know is that Eastern has a future."
The deal with Ueberroth, however, was not yet finalised and was conditional upon Ueberroth being able to broker an official agreement to end the strike by 11 April. Despite the unions agreeing to the compromises on salaries and benefits, attempts to reach a formal agreement soon stalled in the face of the unions' demand that Eastern be removed from Lorenzo's control under the transitional period while the bankruptcy court and regulatory agencies reviewed and approved the agreement. Lorenzo refused to cede control of the airline during this period, saying that "when you sell a house, you don't hand over the keys until the closing, until you've been paid." After further negotations, Ueberroth appeared to have reached a deal between the unions and Shapiro to appoint former Secretary of Defence Frank Carlucci as trustee to replace Lorenzo at the head of Eastern's operations during the transitional period. However, Eastern's chief bankruptcy attorney Harvey R. Miller threatened to sue the court as soon as he heard of the deal, saying that a trustee could not be appointed under Chapter 11 unless the court had proved gross mismanagement, fraud, or conflict of interest by Lorenzo. In the face of Miller's threat, Lifland announced that he would not appoint a trustee and that Lorenzo would remain in charge of Eastern's operations during any transitional period. Further attempts at negotiations soon faltered, with the unions refusing to accept the appointment of a co-chair of Eastern to share the duties with Lorenzo, as it would still leave Lorenzo partially in charge, and Ueberroth refusing an expedited transitional period that would see the company out of Lorenzo's hands sooner, in case Eastern turned out to be in worse financial shape than he believed.
After more last-minute negotiations failed to gain any traction, Ueberroth announced that the deal had fallen through and that he would end his attempts to buy Eastern Air Lines. On 17 April, Lorenzo released a press statement saying that "Eastern is no longer for sale."
Faltering of the pilots' strike On 1 August, Eastern management announced that the airline would be further increasing the number scheduled daily flights to 350, made possible by leasing planes and crew from Continental (also owned by Lorenzo). On 4 August, Eastern pilot and union leader Jack Bavis sparked controversy among the pilots when he called for an end to the strike, leading to a further wave of pilots crossing the picket line; he would subsequently be removed from his position in the union. On 6 August, the union came close to deciding to end the strike, however ultimately decided to continue.