Eastern Air Lines, Inc.
Eastern Air Lines, Inc.
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Eastern Air Lines, Inc.
Depositary Preferred Shares
January 27, 1992
Security-Columbian/United States Bank Note Company
12" (w) x 8" (h)
Show the exact certificate you will receive
Eastern Air Lines was a composite of assorted air travel corporations, including Florida Airways and Pitcairn Aviation. In the late 1920s, Pitcairn Aviation won a contract to fly mail between New York City and Atlanta, Georgia on Mailwing single-engine aircraft. In 1929, Clement Keys, the owner of North American Aviation, purchased Pitcairn. In 1930, Keys changed the company's name to Eastern Air Transport. After being purchased by General Motors and experiencing a change in leadership after the Airmail Act of 1934, the airline became known as Eastern Air Lines.
Growth under Rickenbacker
In 1938 World War I flying ace Eddie Rickenbacker bought Eastern from General Motors. The complex deal was concluded when Rickenbacker presented Alfred P. Sloan with a certified check for $3.5 million. In March 1939 Eastern had 15 weekday departures from Newark, New Jersey (six to Washington, DC, five to Miami and one each to Richmond, Atlanta, Houston and San Antonio), two from Chicago to Miami, one from Tampa to Atlanta and one from Tallahassee to Memphis. Those flights and their returns were Eastern's whole scheduled operation; it fit on one page in the Airways Guide. Then as later, Eastern was the fourth largest airline in the country by passenger-miles (103 million in 1939).
The Great Silver Fleet
Rickenbacker pushed Eastern into a period of growth and innovation; for a time Eastern was the most profitable airline in the post-war era, never needing state subsidy. In the late 1950s Eastern's position was eroded by subsidies to rival airlines and the arrival of the jet age. On October 1, 1959, Rickenbacker's position as CEO was taken over by Malcolm A. MacIntyre, a brilliant lawyer but a man inexperienced in airline operations.' Rickenbacker's ouster was largely due to his reluctance to acquire expensive jets as he underestimated their appeal to the public. A new management team headed by Floyd D. Hall took over on December 16, 1963, and Rickenbacker left his position as Director and Chairman of the Board on December 31, 1963, aged 73.
In 1956 Eastern bought Colonial Airlines, giving the airline its first routes to Canada.
The Jet Age
In November 1959, Eastern Air Lines opened its Chester L. Churchill-designed Terminal 1 at New York City's Idlewild International Airport (later renamed John F. Kennedy International Airport). In 1960, Eastern's first jets, Douglas DC-8-21s, started to take over the longer flights, like the non-stops from Chicago and New York to Miami. The DC-8s were joined in 1962 by the Boeing 720 and in 1964 by the Boeing 727-100, which Eastern (along with American, and United) had helped Boeing develop. On February 1, 1964, Eastern was the first airline to fly the 727. Shortly after that, "Captain Eddie" Rickenbacker retired and a new image was adopted, which included the now famous hockey stick design, officially Caribbean Blue over Ionosphere Blue. Eastern was also the first US carrier to fly the Airbus A300 and the launch customer for the Boeing 757.
On April 30, 1961, Eastern inaugurated Eastern Air Lines Shuttle. Initially 95-seat Lockheed Constellation 1049s and 1049Cs left New York-LaGuardia every two hours, 8 am to 10 pm, to Washington National and to Boston. Flights soon became hourly, 7 am to 10 pm out of each city. Shuttle emphasized convenience and simplicity—revolutionary in an era when air travel was considered a luxury.
Internationalization began as Eastern opened routes to markets such as Santo Domingo and Nassau, Bahamas. Services from San Juan, Puerto Rico's Luis Muñoz Marín International Airport were expanded. In 1967, Eastern purchased Mackey Airlines, a small air carrier primarily operating in Florida and the Bahamas as part of this expansion.
Eastern bought the Lockheed L-1011 TriStar and Airbus A300 widebody jets; the former would become known in the Caribbean as El Grandote (the huge one). Although Eastern had purchased four 747s, the delivery slots were sold to Trans World Airlines (TWA) when Eastern decided to purchase the L-1011.
Due to massive delays in the L-1011 program, mainly due to problems with the Rolls-Royce RB211 engines, Eastern leased two Boeing 747-100s from Pan Am between 1970 and 1972 and operated the aircraft between Chicago and San Juan as well as from New York to Miami and San Juan.
"The RB211 programme might easily have foundered in 1971 if it had not been for the steadfast support of Eastern Airlines, one of the major launch customers for the Lockheed TriStars. The President of Eastern was one Sam Higginbottom, who never wavered and thereby acquired some criticism." - Stanley Hooker
Just before Walt Disney World opened in 1971, Eastern became its "official airline". It remained the official airline of Walt Disney World and sponsored a ride at the Magic Kingdom park (If You Had Wings in Tomorrowland where Buzz Lightyear's Space Ranger Spin is currently located) until its contracting route network forced Disney to switch to Delta shortly before Eastern's 1989 bankruptcy filing.
The famous "Wings of Man" campaign in the late 1960s was created by advertising agency Young & Rubicam, and restored Eastern's tarnished image until the late 1970s, when former astronaut Frank Borman became president and it was replaced by a new campaign, "We Have To Earn Our Wings Every Day". The new campaign, which featured Borman as a spokesperson, was used until the mid-to-late 1980s.
Under bankruptcy, Eastern launched a "100 Days" campaign, in which it promised to "become a little bit better every day".
In 1975, Eastern was headquartered at 10 Rockefeller Plaza in New York City. After Frank Borman became president of Eastern Air Lines in 1975, he moved Eastern's headquarters from Rockefeller Center to Miami-Dade County, Florida.
Eastern's massive Atlanta hub was in direct competition with Delta Air Lines, where the two carriers competed heavily to neither's benefit. Delta's less-unionized work force and slowly expanding international route network helped lead it through the turbulent period following deregulation in 1978.
In 1980, a Caribbean hub was started at Luis Muñoz Marín International Airport (known at the time as "Isla Verde International Airport") near San Juan, Puerto Rico. In 1982, Eastern acquired Braniff's South American route network. By 1985, Eastern was the largest IATA airline in terms of passengers and operated in 26 countries on three continents.
During this era, Eastern's fleet was split between their "silver-colored hockey stick" livery (the lack of paint reduced weight by 100 pounds) and their "white-colored hockey stick" livery (on its Airbus-manufactured planes, the metallurgy of which required paint to cover the aircraft's composite skin panels).
In 1983 Eastern became the launch customer of Boeing's 757, which was ordered in 1978. Borman felt that its low cost of operation would make it an invaluable asset to the airline in the years to come. However, higher oil prices failed to materialize and the debt created by this purchase coupled with the Airbus A300 purchases in 1977 contributed to the February 1986 sale to Frank Lorenzo's Texas Air. At that time, Eastern was paying over $700,000 in interest each day before they sold a ticket, fueled, or boarded a single aircraft.
Starting about 1985, Eastern offered "Moonlight Specials", with passenger seats on overnight flights scheduled for cargo from thirty freight companies. The flights, which operated between midnight and 7 am, served 18 cities in the United States connecting mainly to Houston (IAH). Eric Schmitt of The New York Times said that the services were "a hybrid of late-night, red-eye flights and the barebones People Express approach to service." The holds of the aircraft were reserved for cargo such as express mail, machine tool parts, and textiles. Because of this, the airline allowed each passenger to take up to two carry-on bags. The airline charged $10 for each checked bag, which was shipped standby. The airline charged between 50 cents and $3 for beverages and snacks. Bunny Duck, an Eastern flight attendant quoted in The New York Times, said that the passengers on the special flights were "a cross section of families, college kids, illegal aliens and weirdos from L.A.".
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.
Sale to Texas Air
Unable to keep up, Borman agreed to the sale of the airline in 1986 to Texas Air, led by Frank Lorenzo He had already purchased Continental Airlines and lost a bidding war for TWA to Carl Icahn.
In February 1987, the Federal Aviation Administration imposed a $9.5 million fine against Eastern Air Lines for safety violations, which was the largest fine assessed against an airline until American Airlines was fined $24.2 million in 2010.
In 1988, Phil Bakes, the president of Eastern Air Lines, announced plans to lay off 4,000 employees and eliminate and reduce service to airports in the Western United States; he said that the airline was going "back to our roots" in the East. At the time, Eastern was the largest corporate employer in the Miami area and remained so after the cuts. John Nordheimer wrote in a The New York Times article that the prominence of Eastern in the Miami area decreased as the city became a finance and trade center and as the area had a population increase-based economic growth, instead of a purely tourism-based growth.
During Lorenzo's tenure, Eastern was crippled by severe labor unrest. Asked to accept deep cuts in pay and benefits, on March 4, 1989, Frank Lorenzo locked out Eastern's mechanics and ramp service employees, represented by the International Association of Machinists and Aerospace Workers (IAM). Concerned that if Lorenzo was successful in breaking the IAM he would do the same to the pilots' and flight attendants' unions, the pilots represented by Air Line Pilots Association (ALPA) and flight attendants represented by the Transport Workers Union (TWU) called a sympathy strike. Those actions effectively shut down the airline's domestic operations. Non-contract employees, including airport gate and ticket counter agents and reservation sales agents, could not honor the strike. Due to the lockout and sympathy strike, cancelled flights resulted in the loss of millions of dollars in revenue.
In 1989, Lorenzo sold Eastern Air Lines Shuttle to real estate magnate Donald Trump (who named it the Trump Shuttle) while selling other parts of Eastern to his Texas Air holding company and its subsidiary, Continental Airlines, at terms disadvantageous to Eastern. In 1989 George Berry, the Georgia Industry and Trade Commissioner, asked Eastern to consider moving its headquarters from the Miami area to the Atlanta area.
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. 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.
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.
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