In the late 1970s and early 1980s, during the
deregulation, labor disputes and high debt loads strained the company under the leadership of former astronaut
Frank Borman.
Frank Lorenzo acquired Eastern in 1985 and moved many of its assets to his other airlines, including
Continental Airlines and
Texas Air. After continued labor disputes and a crippling strike in 1989, Eastern ran out of money and was liquidated in 1991.
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.
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Eastern began losing money as it faced competition from
no-frills airlines, such as
People Express, which offered lower fares. In an attempt to differentiate itself from its bargain competitors, Eastern began a marketing campaign stressing its quality of service and its rank of highly experienced pilots.
As a result of the strike, weakened airline structure, high fuel prices, inability to compete after deregulation and other financial problems, Eastern filed for
bankruptcy protection on March 9, 1989.
[22] This allowed Lorenzo to continue operating the airline with non-union employees. When control of the airline was taken away from Lorenzo by the courts and given to Marty Shugrue, it continued operations in an attempt to correct its cash flow, but to no avail.
[23]
The airline stopped flying at midnight Saturday, January 19, 1991. On the previous evening company agents, unaware of the decision, continued to take reservations and told callers that the airline was not closing. Following the announcement, 5,000 of the 18,000 employees immediately lost their jobs. Of the remaining employees, reservation agents were told to report to work at their regular times, while other employees were told not to report to work unless asked to do so.
[24] The Eastern shutdown eliminated many airline industry jobs in the
Miami and
New York City areas.
[25]