CHAPTER 19
Former B-727 Captain Wayne Dolan, a 25-year Eastern Airlines veteran, makes his
living today as an independent painting and roofing contractor in Baltimore. He has seen his own American dream evaporate.
But like nearly all the last-ditch fighters against Frank Lorenzo, Dolan
radiates a kind of quiet satisfaction, despite the terrible price he paid
personally.
“I don’t have a job, but Frank doesn’t have an airline, either,” Dolan said
during a 1991 interview.
After getting out of the army in 1964, Dolan learned to fly in a
“I’ll always be grateful to Eastern for giving me a chance to be an airline
pilot,” Dolan said at the time. “There’s nothing I wouldn’t do to save Eastern,
the old Eastern the way it was before Lorenzo. But the job isn’t worth having
now. It was either die fighting Lorenzo or watch him kill the airline one cut at
a time.”
From being one of ALPA’s staunchest loyalists during the strike, Dolan became
one of 2,504 former Eastern pilots suing ALPA under a “failure of duty of fair
representation” lawsuit.
“Hell, I don’t want ALPA’s money,” said Dolan in 1991. “I just want a job flying
the same airplane that somebody else is flying right now with another paint job.
I think ALPA owes me that. I was up on a two-story house near BWI [Baltimore–Washington International
Airport] last week, putting on a roof, right under
the ILS path. Talk about eating your heart out.”
As a “50-something” pilot several years out of currency, Dolan’s anguish was
palpable. He knew his chances of ever getting another airline job were slim. He
could only laugh grimly at a letter of rejection from Delta saying he did not
meet “minimum qualifications,” despite his years of airline experience. He knew
ALPA was not really responsible for what happened to him; nevertheless he felt
betrayed. Like many ex-Eastern pilots, Dolan believed ALPA’s “fragmentation
policy” should have guaranteed him a cockpit seat somewhere in the industry.
Implicit in Dolan’s complaint is the idea that if ALPA only had the will,
it could have forced its fragmentation policy on a recalcitrant airline
industry.
“There is always a tendency to blame ALPA when a strike goes badly,” Hank Duffy
said with resignation during the summer of 1989, as the strike was starting to
unravel. “The Eastern pilots did everything right. If you took a snapshot when
they went out on March 4, it was the absolute right thing to do. They had the
resources, they had the ultimate enemy, and they were together. For it not to be
going well brings out all the residual hostility toward ALPA, because they think
their union should be able to stop that from happening.”
In February 1989, Lorenzo rejected binding arbitration with the International
Association of Machinists (IAM) after two years of sabotaging meaningful
negotiations. Walter Wallace, head of the National Mediation Board, blasted
Lorenzo’s refusal to negotiate fairly and asked U.S. President George Bush for a
Presidential Emergency Board (PEB) to resolve the impasse. Lorenzo responded by
denouncing Wallace (a Republican appointed by Dwight Eisenhower), who had more
often supported management than labor, as a “shill for organized labor.”
The NMB, acting under its mandate to prevent strikes in the airline industry,
had stalled the strike Lorenzo wanted as long as it could. Now the machinists,
Lorenzo’s perennial first target in his unionbusting pattern, were finally in
range.
Since 1928, the NMB had asked for a PEB 211 times, with no refusals from the
occupant of the White House. George Bush broke the pattern. It really shouldn’t
have surprised anybody.
“We knew the Bush Administration was not prolabor,” Hank Duffy said. “But we had
no comprehension of the depths to which they would stoop to carry Frank
Lorenzo’s water.”
At the beginning of the Bush presidency, Duffy believed a change for the better
might be in the offing. Bush had made a point, publicly and most unusually, of
his intention to clean up the shoddy ethical practices of the Reagan years,
often referred to as the “sleaze factor.” Duffy hoped in vain. The Department of
Transportation (DOT) proved unwilling to curb Lorenzo. ALPA asked the DOT for a
“fitness review” of Eastern on Dec. 7, 1989. DOT head James Burnley denied the
fitness review a mere seven days later, an unusually short period of time for
such an administrative action. He also used injudicious, biased language,
calling ALPA “irresponsible” and declaring that it had “unclean hands.”
Burnley did this at the same time he was negotiating for a job
with the law firm that represented Eastern—a clear conflict of interest.
The internal politics of the Republican Party also damaged ALPA’s chances of
getting a sympathetic hearing from the Bush Administration. During his first
year in office, Bush had been looking for some way to emulate his predecessor,
Ronald Reagan, who during his first year had broken the PATCO strike to
almost universal applause, including most airline pilots. Bush, always on shaky
ground with right-wing conservatives in his own party, saw backing Lorenzo as a
risk-free way to enhance his popularity. If Lorenzo won, Bush could bask in the
approval of his party’s traditional antiunionism. If Lorenzo lost, Bush could
make pious noises about the sanctity of collective bargaining and walk away.
Given the revolving door between Republican administrations and Lorenzo’s
business associates since 1981, Bush could hardly have done otherwise. ALPA
would later document 30 top officials who had rotated between service to Bush
and employment by Lorenzo. During the 1988 presidential election campaign,
Lorenzo had contributed $100,000 to the Republicans. That kind of money buys a
sympathetic ear.
Still, George Bush’s precedent-breaking failure to create a PEB was a bitter
disappointment to Eastern’s pilots. Who could blame them for hoping that old
naval aviator Bush might do a favor for his fellow airmen? But Frank Lorenzo’s
cozy relationship with the Republicans doomed these hopes. George Bush would
give Lorenzo the strike he wanted.
At first Eastern’s pilots appeared to hold all the cards. Lorenzo had made
arrangements with outside mechanical contractors to service his airplanes, and
he knew from past experience that he could circumvent the IAM. Eastern’s pilots
were the key. If ALPA honored the IAM picket line, the airline would shut down.
But if ALPA crossed, Lorenzo would find the IAM action merely an annoyance.
Armed with this certainty, Eastern’s pilots made demands on Lorenzo. MEC
Chairman Jack Bavis (who had been J.J. O’Donnell’s executive administrator for
12 years) made clear that pilots wanted four distinct things, backed by ironclad
guarantees, or they would walk.
First, they wanted “objective, measurable actions” (a “business plan”) from
Lorenzo, one that would make Eastern a viable airline again.
Second, they wanted a “fence” between Eastern’s operations and Continental’s to
prevent any future asset looting.
Third, they wanted a contract with Lorenzo’s holding company, Texas Air
Corporation—not with Eastern—because they knew that a bankruptcy court
could invalidate any promise that Lorenzo made to them in Eastern’s name.
Fourth, they wanted Eastern’s operations merged into Continental’s, because they
knew Lorenzo was playing a corporate shell game that isolated them as union
orphans in his nonunion house. They also figured that once the two airlines were
unified, they had a puncher’s chance to bring the combined operation back into
ALPA.
On March 1, three days before the strike “release,” Lorenzo responded to ALPA’s
four-point demand by dusting off his “Frankie Smooth Talk” routine. He mailed to
all 3,400 Eastern pilots a 15-minute video of an informal interview with him
sitting relaxed on a sofa. On the surface, the talk sounded good—Lorenzo seemed
to agree to their demands. But on closer analysis, Lorenzo’s promises proved a
sham, for he had, in every case, left himself a loophole. Past experience
suggested that if a loophole existed, Lorenzo would use it.
With ALPA’s support, Eastern’s pilots had become quite expert at financial
analysis. They had hired a Touché Ross analyst named Farrell Kupersmith to
advise them. Kupersmith, whose no-nonsense style appealed to Eastern’s pilots,
had conducted an extensive analysis of Lorenzo’s jerrybuilt empire, and he was
convinced that if Lorenzo didn’t agree to the four-point plan, ALPA could find
the financial pressure points to nail him.
But Lorenzo was nothing if not wily. He decided to gamble that the pilots’
long-standing animosity to Charlie Bryan, leader of the IAM, would prevent
meaningful cooperation between the two unions—a 1986 “cooperation agreement”
notwithstanding.
On March 2, Lorenzo rejected ALPA’s four-point plan ultimatum. He publicly
stated his belief that 800 of Eastern’s 3,400 pilots would cross the IAM’s
picket line if ALPA’s leaders were foolish enough to authorize a sympathy
strike. Counting 200 management pilots plus assorted instructors from the Miami training base,
Lorenzo figured he could operate a large part of his schedule for almost 10
days—just long enough to shift some of his excess Continental capacity to
Eastern’s routes. Seeing Lorenzo operate their former routes with Continental
crews and equipment, he believed, would so unnerve Eastern’s remaining pilots
that the strike would collapse within two weeks.
With his former “wonder boy” reputation slipping, particularly on Wall Street,
Lorenzo was also counting on a sharp, quick strike victory to once again make
him the darling of the antilabor movement. It would also simultaneously catapult
him to the very top of the industry, placing him in command of the largest
airline in the free world, without a single union to brook his will.
At midnight on March 4, Eastern’s pilots put their careers on the line. They
walked out in sympathy with the IAM, and the great test began. It was, in the
history of the airline industry, the equivalent of Napoleon’s crossing of the Niemen
River to invade Russia in 1812, or Hitler’s launching of Operation Barbarossa from nearly the same spot in 1941. Lorenzo
should have heeded the fate of his historical soul mates. But he seemed
oblivious to the fact that most Eastern pilots hated him so much that they would
call artillery in on their own position before surrendering.
Lorenzo’s boast that 800 pilots would immediately cross the IAM’s picket lines
proved hollow—only a piddling 120 of Eastern’s 3,400 pilots crossed during the
first week.
ALPA responded furiously. The MEC chairmen, meeting as the Executive Board on
March 13, voted strike benefits of $2,400 per month plus a package of loans.
Hank Duffy announced that the entire $37 million in ALPA’s Major Contingency
Fund would be made available to defeat Lorenzo. To nail down this fight with
Lorenzo once and for all, the Executive Board also adopted strong resolutions on
fragmentation and “first right of hire” should Eastern go into liquidation.
Ominously for pilots like Wayne Dolan, the Executive Board had to qualify these
guarantees by noting that they would be “subject to negotiation with the pilots
and management of an acquiring carrier.”
With good solidarity, good financial support, an excellent strike organization,
and popular backing that ranged across the political spectrum from Ralph Nader
on the left to William Safire on the right, Eastern’s pilots should have been
able to win this fight with Lorenzo. The pilots of American Airlines, through
their ALPA clone, the Allied Pilots Association, contributed $100,000 to the
Eastern pilots’ “welfare fund.” Lorenzo was widely unpopular, a fact he seemed
unaware of and considerably rattled by when asked on a national TV newscast:
“How does it feel to be the most hated man in America?”
On March 9, confronted with a labor solidarity he had never experienced before,
Lorenzo filed for bankruptcy. The key player in the strike would now be Judge
Burton R. Lifland, whose reputation for favoring management over labor was
well-established. Owing to his pro-Lorenzo rulings, in hindsight it is easy to
see that it would have been wiser had ALPA ended the strike immediately upon the
bankruptcy filing. Lorenzo had pulled one of his typically dubious legal
maneuvers by filing for bankruptcy in New York,
instead of Miami, where Eastern was based. Bankruptcy judges in New York
had a history of cooperating with the “debtor in possession,” while Florida judges tended to
side with creditors. Pension obligations and unpaid salaries would have given
Eastern’s unions standing as major “unsecured” creditors. More sinisterly,
Lorenzo’s principal bankruptcy lawyer, Harvey Miller, had a “long-standing
relationship” with Judge Lifland, according to Aaron Bernstein, the reporter who
covered the story for Business Week.
Rank-and-file Eastern pilots were probably more militant about the strike than
their leadership. Almost unanimously, they figured that Lorenzo had left them no
choice but to strike. Lorenzo’s mismanagement of Eastern and internal harassment
of employees had become legendary. The employees pinned their hopes for victory
on several factors, first among them a “white knight” to buy out Lorenzo.
“They could have gone back to work unconditionally, but they were not
psychologically ready,” Hank Duffy said in his 1990 interview of Eastern’s pilot
group at the time of the bankruptcy filing. “We had this son-of-a-gun on the
run. There were buyers, and we wrongly believed we could force a sale on him.
But the bankruptcy court so tilted the deal against us that unless Lorenzo
wanted out, the airline was not for sale.”
Why wasn’t Eastern sold? Within days of the March 9 bankruptcy filing, a
suitable candidate had emerged. He was Peter Ueberroth, former commissioner of
baseball. He had solid financial backing, a seasoned airline manager to run
Eastern (Martin Shugrue, a former Texas Air Corporation official who, like so
many others, Lorenzo had fired), and union support.
Only Lorenzo stood in the way of a sale. Lorenzo said he was amenable to
a sale, Judge Lifland said he favored it and even appointed an
“examiner,” Washington
lawyer David Shapiro, to facilitate the search for a buyer. The basic reason
Lorenzo was able to sabotage a sale was because Lifland let him.
Lorenzo undermined the sale to Ueberroth by his usual trick—shifty bargaining.
Every time Ueberroth’s negotiators thought they had a deal, Lorenzo backed off
and suggested changes. Pilots had long complained about Lorenzo’s negotiating
tactics. Now his fellow businessmen were getting a taste.
“I can understand now why the unions are so angry with him,” one frustrated
Ueberroth lieutenant said.
Aaron Bernstein wrote in Grounded: “Lorenzo’s bargaining style—his
demands to change terms in a deal even after he had agreed to it—destroyed any
faith Ueberroth might have had in anything Lorenzo said.”
But Lorenzo’s style of negotiating a sale was possible only because Judge
Lifland put up with it. Delay worked to Lorenzo’s advantage. Because Lifland
continued to let him strip assets from Eastern, the airline was worth less to a
potential buyer every day.
Eastern’s pilots were powerless to prevent this slow dwindling away of their
airline’s assets. The worst example of which was Lifland’s approval, in May
1989, of the sale of the shuttle to Donald Trump for $350 million. With the
profitable shuttle service stripped from the airline, its economic viability was
doubtful.
Still a sale seemed so close. In early April, a month before Lifland
allowed the shuttle sale, major newspapers ran stories indicating the sale to
Ueberroth was a “done deal.” Eastern’s pilots were so certain they were rid of
Lorenzo that they had a memorable party in Miami that lasted until 3
a.m.
The sale would never happen, but it took a couple of months before the pilots
realized that fact. During this time, Eastern’s pilots clung to the hope that
either Judge Lifland would replace Lorenzo with a “trustee” or force him
to sell out. By mid-April, it should have been apparent that Lifland would do
neither.
Farrell Kupersmith began warning Eastern’s pilots shortly after the Ueberroth
sale collapsed that Judge Lifland was allowing Lorenzo a free hand and that
perhaps they ought to reconsider their strike decision. By leaving Lorenzo as
“debtor in possession,” Judge Lifland permitted him to sell enough assets to
satisfy creditors. In bankruptcy, the interests of creditors are paramount. So
long as lenders thought Lorenzo could service their debt by cannibalizing the
airline, they were willing to go along—regardless of the effect upon the
airline’s long-term employees.
Perhaps Kupersmith’s warnings were too subtle for rank-and-file pilots to
understand. By early summer, Eastern’s leadership group, particularly MEC
Chairman Jack Bavis, began to realize the trouble they were in. He began to urge
pulling down the strike when it became clear that Lorenzo could not be forced
into a sale. But for rank-and-file pilots, their blood inflamed, the struggle
against Lorenzo had become a holy war.
“The line pilots wouldn’t accept any deal like that,” Randy Babbitt observes.
“The flaw was that the strike had made us feel strong. We had shut Eastern down
with a handful of pilots and pocket change. Just the thought of having the
oppressive harness of Lorenzo lifted gave line pilots all these great visions of
a wonderful airline surging forward. That became the new goal, not getting a new
contract. If there was a point in time that we lost our focus as a pilot group,
it was about six weeks into the strike. We became obsessed with finding a white
knight. We wanted Lorenzo gone.”
On April 17, Lorenzo announced publicly that Eastern was not for sale. The
pilots refused to believe that Judge Lifland would permit him to wriggle out.
Indeed, the Judge ordered Examiner Shapiro to continue the search for a buyer.
So many potential buyers seemed to be lining up to take Ueberroth’s place, that
Jack Bavis created a committee to vet them. Raymond “Buzz” Wright and Jack
Suchocki handled this task. Eventually Eastern’s pilots settled on a 42 year-old Chicago
commodities trader named Joe Ritchie. They offered Ritchie the same concession
package they had previously offered Ueberroth. But Ritchie stumbled—he couldn’t
nail down his financing.
“Lorenzo was of a mindset to prevail,” says Randy Babbitt. “If it meant tearing
Eastern apart bolt by bolt, he was hell bent to do it.”
Unfortunately, nearly everybody was slow to recognize that Judge Lifland was
going to let him do it. In desperation, ALPA engineered a joint effort by
organized labor to buy Lorenzo out. Several major unions promised $5 million
each out of their pension funds. But Examiner Shapiro rejected the idea of an
employees’ buyout, and Judge Lifland supported him.
These maneuvers took until late May, and in the meantime, Lorenzo had embarked
upon a Continental-style effort to break the strike. Enraged Eastern pilots,
their fury growing, could only watch as Lorenzo announced a reorganization that
would reduce the airline’s size to barely half its prestrike level. Lorenzo had
quietly hired 700 scabs, so there weren’t enough jobs for every striker, if they
did pull down the strike “unconditionally.”
“All of us or none of us,” rank-and-file pilots vowed, as they voted to continue
the strike against the advice of their own leadership.
Increasingly, the Eastern strikers pinned their hopes for victory on “ALPA’s
Nuke,” an industrywide suspension of service—an SOS. Hank Duffy’s refusal to
endorse an SOS generated enormous anger among them.
“When the strike started to go bad, they wanted a national action, but I told
the Eastern MEC going into the strike, and
anybody can research the record, that they could not expect us to shut down the
country to win a strike,” Duffy asserted in his 1990 interview. “There are some
issues—cabotage and hijacking—that involve everybody where an SOS may be
possible. But no single strike, even against Frank Lorenzo, will penetrate all
the local interests on an individual property. So nobody who does not bargain
nationally so that all the local units are involved, commits a national action
like an SOS.”
At a July LEC meeting of several hundred furious Eastern pilots in an Alexandria, Va., hotel, Farrell Kupersmith, Randy
Babbitt, and Jack Bavis faced a hostile reception. Bavis argued that Lorenzo was
winning through bankruptcy again, and the issue now was simply between saving
some jobs or losing them all to scabs. When the 700 scabs had completed their
initial operating experience (IOE), Bavis warned, there would be no way to get
rid of them. Another large group was in ground school.
“We see the landscape out there as bleak,” Bavis admitted.
If they voted to call down the strike and go back to work unconditionally, Bavis
said, between 1,300 and 1,700 of them would have jobs (although Lorenzo was
saying at the time only 950 strikers would be rehired). For a pilot group that
numbered 4,500 dues-paying ALPA members at the time of Lorenzo’s accession in
February 1986, and 3,400 at the beginning of the strike in March 1989, this was
totally unacceptable.
Angry questions assailed Kupersmith, once so popular as a teleconference
participant that he was nicknamed “Captain Video.” He tried patiently to explain
that the bankruptcy process had “co-opted all the points of financial leverage”
that existed at the beginning of the strike.
Kupersmith also announced that he would take no further payment or fees from
ALPA but would continue to serve. The general tone of the questions directed at
Bavis, Babbitt, and Kupersmith indicated that the rank-and-file was in no mood
to surrender. They would fight Lorenzo to the death—regardless of their
leadership’s advice. It was an ugly scene, rife with charges of bad faith,
incompetence, and worse.
“Don’t go shooting at ALPA,” Bavis pleaded with angry pilots demanding that Hank
Duffy shut down the entire airline industry. “Hank Duffy told us from the very
beginning that there would be no SOS.”
“If we go back, we’ll be nothing but a bunch of damned scabs working for
Continental,” Skip Copeland argued, his craggy face a mask of determination.
Bavis, fighting for his life, committed himself to staying on strike for as long
as the pilot group wanted, but he insisted that duty required him to render his
best advice, which was to call it off. Hank Duffy agreed with Bavis.
“Kupersmith became something more than a
consultant to the Eastern pilots,” says Hank Duffy. “He became a hero because he
had a great way of communicating and great credibility. When Bavis decided it
was time for them to go back, Kupersmith agreed. He went out on road shows and
told them it didn’t make sense to stay out any longer. That was not the message
the Eastern pilots wanted to hear, so they rebelled. A lot of them said
Kupersmith changed his story. He may have put a little different spin on things,
but the facts had changed and our situation had changed.”
By July, Duffy had become convinced, after assessing all factors, that ALPA’s
best interests nationally would be served by ending the strike. Strike
assessments that individual members had agreed to impose upon themselves were
becoming onerous and controversial. Inevitably, as the prospects for an outright
victory over Lorenzo faded, pilots resented paying. Their resignations from ALPA
would generate internal problems for years to come. The only thing keeping
Eastern’s pilots from seeing the light, Duffy believed, was their forlorn hope
that he would call a national SOS. Duffy had to disabuse them.
On August 20, the Executive Board did so by formally rejecting an SOS. To
Eastern’s hard-core strikers, this was prima facie evidence that Jack
Bavis had failed them. Early in September, reflecting rank-and-file anger, they
recalled Bavis and elected his long-time antagonist, Skip Copeland. This turmoil
had the predictable effect of unnerving many wavering strikers. About 500 of
them crossed the picket line late that summer. Most of this leakage came a full
five months into the strike. Until then, the Eastern pilot group had displayed
remarkable solidarity, holding their lines tenaciously. But for the last-ditch
holdouts, the strike had become a war with no quarter asked and none given.
In October, with the strike obviously weakening, the Executive Board recommended
a reballot on the strike assessment—a critical test of ALPA’s willingness to
continue the battle. For a strike that seemed to be losing steam, it would be
remarkable indeed if ALPA’s rank-and-file voted to continue financially
supporting Eastern’s pilot group. Individual ALPA members would have to
literally put their money where their mouths were. Strike assessments have been
unfailingly controversial in ALPA history, and the outcome of this referendum
was in doubt. In an “all member” mailing, Duffy urged every pilot to keep the
faith by voting to continue the assessment. ALPA’s 34,000 members heeded his
advice, but only narrowly.
Like the Continental loyalists before them, Eastern’s pilots waged a good fight
against overwhelming odds. Had the national political climate been more
favorable, they would have won. They engaged in a variety of effective and
innovative tactics, including a 3,000 mile picket line that stretched,
symbolically and actually, across the continent. When the nationwide picket line
was completed on September 6, a bevy of major politicians, including Sen. Edward
Kennedy and Congressman James Oberstar, chairman of the House Aviation
Subcommittee, joined Hank Duffy and AFL-CIO President Lane Kirkland on the steps
of the Capitol building, calling for George Bush to support a Presidential
Emergency Board (PEB) to resolve the strike with justice for all parties.
Kennedy, whose Senate Committee had midwifed deregulation in 1978, had turned
against it by then.1
All the while, Eastern’s striking pilots kept up their picketing and publicity
activities. The damage inflicted on Lorenzo by these actions was substantial, as
the steady downward trend of his passenger loads showed. The strikers made sure
the public knew about the marginal quality of the scab pilots Lorenzo was
hiring. Confidential documents leaked by an ALPA sympathizer at the Hartley Training Center
in Miami showed that an astounding 40 percent of
Lorenzo’s scab new-hires failed to complete training! Even nationwide TV ads
featuring a scab pilot lauding the quality of the “New Eastern” couldn’t burnish
the airline’s tarnished image. A skittish public, worried about safety, stayed
away in droves.
Toward the end, with every avenue of attack stymied by Judge Lifland, Eastern’s
pilots placed all their bets on a tactic old Dave Behncke would have approved.
By the fall of 1989, six months into the strike, their only hope was a direct
political solution. To this end, Eastern’s pilots, supported by the entire
apparatus of organized labor, lobbied Congress furiously to impose a
“back door PEB,” a bipartisan commission which would force George Bush
into action. They hoped that, confronted by such an expression of congressional
support for Eastern’s strikers, Bush would come to his senses. Experts warned
that there was virtually no chance of Congress overriding a Bush veto, so
everything depended upon his being willing, at long last, to break ranks with
Frank Lorenzo. Given the antilabor bent of the Republican Party, it was a
forlorn hope.
On November 21, Bush vetoed Congress’s version of a PEB, saying it would “hinder
saving Eastern.” The Republican minority in Congress sustained his veto. Lorenzo
wrote Bush a chummy note thanking him for his “courage and clear vision.”
That was it—the strike had to be stopped. Lorenzo had won the battle, if not the
war. On Nov. 23, 1989, the Eastern MEC, on a motion by “Buzz” Wright, a veteran widely respected for his financial acumen,
called off the sympathy strike. MEC Chairman Skip Copeland opposed Wright, but
he knew it was over. If Buzz Wright thought the game was up, the MEC would
agree. In symbolic protest, Copeland refused to participate in the vote.
As early as the summer of 1989, Hank Duffy believed that Eastern would not
survive, regardless of whether the pilots called down their sympathy strike.
Lorenzo’s mismanagement had gutted the airline, Duffy believed, and nothing ALPA
could do would save it. The effect on Eastern’s pilots would be extreme, Duffy
knew. Their only hope lay in ALPA’s somehow persuading various airline
managements to take the Eastern loyalists aboard voluntarily—preferably in
seniority, but, a job being a job, at the bottom of the list if need be. To this
end, Duffy began contacting MEC chairmen, urging them to approach management
about taking a quota of Eastern strikers. He also editorialized in the July 1989
Air Line Pilot on the moral obligations of all pilots to persuade their
airlines to hire Eastern strikers.
“A willingness to share seniority is not only the moral way to operate—even
though it may impinge upon one’s own advancement—it is also an important check
of our Association’s character,” Duffy wrote. “Conversely, a move that results
from Eastern equipment sales to ‘our’ company is a move up off the backs of
striking pilots. To profit thusly is a serious breach of faith.”
Duffy tried to practice what he preached. He arranged a personal conference with
Ron Allen, CEO of Delta, his own airline. It came to nothing.
“Ron Allen looked me in the face and said, ‘Why should I hire trouble?’” Duffy
recalled in his 1990 interview. “He said he could hire all the 28-year-old
ex-military pilots he needed. He believed that these new-hires wouldn’t come out
of an ‘alien corporate culture’ like the Eastern pilots did. I couldn’t move
him.”
One of those supreme ironies is that some Eastern equipment did wind up at
Delta, by way of Pan Am. When Eastern spun this equipment off to Pan Am, no
pilots were included. By the time Pan Am went under, Duffy’s moral suasion had
taken sufficient root that Delta finally agreed to take Pan Am pilots, “alien
corporate culture” notwithstanding. The newly radicalized Delta pilot group,
which was beginning to experience the same tensions as other ALPA pilot groups,
also exerted pressure to take Pan Am pilots. But no Eastern pilot benefited,
despite the fact that the airplanes had originally been theirs. Braniff
pilots at last had their revenge.
Midway’s pilots, under the leadership of Jerry Mugerditchian, also tried to
honor the spirit of sacrifice Duffy encouraged. When some Eastern equipment and
routes went to Midway, Mugerditchian opened negotiations with management, trying
to get 400 Eastern strikers hired, in seniority. Management refused.
Finally, the only way Midway’s pilots could have forced their airline into
compliance with ALPA fragmentation policy was by going on strike themselves!
The only bright spot came at United, whose battled-hardened pilots demanded
that Eastern’s strikers be given first-right-of-hire, or something approaching
it. Eventually, 600 Eastern refugees would wind up in United cockpits, including
former MEC Chairman Larry Schulte.
Because Rick Dubinsky marched into the office of Bill Traub, vice-president for
flight, and threatened to go to the mat over jobs for former Eastern pilots,
United’s Training Center at Denver
became a haven for nearly 300 of them. This served a double purpose for United’s
pilots—it acquitted their moral obligation to the profession and it also cleaned
house at Denver, which had become a cesspool of scabs trying to hide from the wrath of their
former line pilot colleagues. The pressure of United’s ESOP effort gave Dubinsky
part of the leverage he needed to “de-scab” United’s training center, and a
successful grievance action provided the rest.
But isolated successes like those at United only lessened the sting. Eastern’s
pilots believed ALPA’s efforts to implement “fragmentation policy,” which had
been formally promised to them, were inadequate. While other airlines skimmed
the cream of Eastern’s routes, equipment, and pilots, rank-and-file
strikers could only watch helplessly. Formal promises to implement fragmentation
policy for them were so hedged about with qualifications that they proved
unworkable. For the 1,600 pilots who remained unemployed after ALPA called off
its sympathy strike, the only solace was the bitter pleasure they took in the
fall and final disgrace of Frank Lorenzo.
Unfortunately for Lorenzo, the nationwide recession (which ended the “seven fat
years” of the Reagan boom) had begun by 1989. Lorenzo had once again beaten his
unions, but at a terrible price. Now he needed a thriving economy like the one
that had saved him after the 1983 Continental strike. This time his luck had run
out, but it wasn’t immediately apparent.
By June 1989, Lorenzo was clearly winning his battle with the unions. Judge
Lifland rejected ALPA’s petition to have a trustee installed to run Eastern in
Lorenzo’s place. The creditors had bought Lorenzo’s promise that he could, by a
combination of asset sales and downsizing the airline, pay them back at 100
cents on the dollar. Judge Lifland, ever mindful of the creditors’ views,
publicly stated that he wanted to see the airline flying again. If Shapiro and
the unions couldn’t effectuate a sale, then Judge Lifland would get Eastern back
into the air by helping Lorenzo break the strike.
On July 21, Lorenzo filed his reorganization plan and announced that he would
immediately bring Eastern up to speed by using “leased” nonunion Continental
crews and aircraft. Judge Lifland approved this arrangement with no objections.
Aside from proving, as ALPA had always contended, that Continental and Eastern
really were a “single carrier,” this move forced Jack Bavis to conclude that he
had no choice but to negotiate the best deal he could with Lorenzo. Owing to
changes in the bankruptcy law following the Continental strike, Lorenzo also had
to negotiate. Bavis, too, had to negotiate; otherwise Lorenzo could petition
Lifland to abrogate the contract. But rank-and-file militants saw Bavis’s
required negotiations as a sellout. Bavis was finished politically when the
MEC rejected, in late August, the back-to-work agreement he negotiated, because
it would leave some 2,000 strikers on the street.
With crossovers, scabs, and the Continental lease, Lorenzo had his shrunken
version of Eastern flying again by December 1989. But the economy now
intervened. Nothing he tried generated enough passengers to turn a profit, and
the creditors were getting restless. Finally, Judge Lifland also began to lose
confidence in Lorenzo—at last. In January 1990, Lorenzo reneged on his promise
to pay back creditors fully and offered instead only 50 cents on the dollar.
Most of the money to pay them would come from the proposed sale of Eastern’s
Latin American routes to American Airlines. Perhaps these routes carried a
curse. These were the same jobs that Eastern’s pilots had taken from Braniff’s
pilots in 1982, in clear violation of the spirit of ALPA’s fragmentation policy.
In March 1990, Examiner Shapiro found that Lorenzo had indeed “cherry picked”
Eastern’s assets and had not paid a fair price for them. In 12 of the 15 asset
transfers Shapiro examined, he found that Lorenzo had cheated Eastern and, by
inference, its creditors. Lorenzo settled out of court, in effect pleading
guilty to looting. ALPA had won a moral victory and again petitioned Lifland to
appoint a trustee to run Eastern. To do otherwise, ALPA’s lawyers argued, would
be tantamount to allowing a parent found guilty of child abuse to retain
custody. The judge still refused to remove Lorenzo, but he was clearly beginning
to have doubts. Because Lorenzo’s asset-stripping had damaged the unsecured
creditors, ALPA, as one of them, had standing to sue. But Lifland stayed the
suit.
“We filed a lawsuit charging Lorenzo with fraudulent conveyance, a crime,” says
Randy Babbitt. “I have been around labor a while, I had the warm-up rounds for
Continental. I wrote that off as Texas politics. But I had no idea how
unbalanced bankruptcy could be. I can’t think of a worse place to be as a labor
union. Every grievance is stayed, every piece of litigation is stayed. You
prevail in an arbitration, it’s stayed.”
Judge Lifland’s forbearance toward Lorenzo had as its object to save Eastern—as
a nonunion carrier, of course—but nevertheless to save it. So long as he thought
Lorenzo could do that, he went along, ALPA’s objections notwithstanding. Lifland
had accepted Lorenzo’s original plan, which envisioned full repayment of the
creditors, and Lifland grumbled only briefly at Lorenzo’s second plan, which
contemplated paying off only 50 percent of the unsecured debt.
Meanwhile, the Judge was learning what many veteran Lorenzo-watchers already
knew, that Lorenzo had no idea how to run an airline, other than beating up on
labor. With Phil Bakes as Lorenzo’s nominal president of Eastern, losses
mounted. For the entire period (March 1989 to April 1990), Lorenzo lost
$1.2 billion.
Matters finally came to a head on April 2, 1990, when Lorenzo proposed paying
creditors only 25 cents on the dollar, of which a mere 5 cents was cash. The
remainder would be in junk bonds. The creditors had finally had enough. Lorenzo
had to go, they told Judge Lifland, echoing the position ALPA had taken since
the beginning of the strike. Lifland finally agreed and, on April 18, named
Martin Shugrue, the former TAC official Lorenzo had fired, who had been
Ueberroth’s choice to actually run Eastern, as trustee. Lorenzo, humiliated and
publicly revealed as the incompetent ALPA had always known him to be, was out.
It needn’t have ended that way. The historical record is abundantly clear that
Eastern’s pilots had done their utmost to meet Lorenzo halfway, and more. But
most Eastern pilots saw what Lorenzo was doing to them as so provocative, so
redolent with violations of basic safety doctrines, and so absolutely
destructive of their professional futures that they saw no alternative to
fighting him.
Eastern would linger on under Shugrue’s trusteeship until Jan. 18, 1991, before
finally succumbing. During the eight months of life remaining to the airline
between Lorenzo’s fall and the liquidation, the usual ebb and flow of hope
mingled with despair, for both ALPA’s loyalists and the scabs.
With Lorenzo gone, his scabs stood naked, clearly expendable. Phil Bakes
resigned as Eastern’s president two days after Shugrue took over as trustee.
Shugrue owed the scabs nothing, and they knew it. In a panic, they tried,
pathetically, to protect themselves by forming their own union. On May 30, they
announced something called the Eastern Pilots Association, claiming to represent
93 percent of the 1,775 pilots then employed by the airline. They petitioned the
NMB for an election, claiming to “better represent the real interests of the men
and women who are flying Eastern’s planes every day.” It was exactly what George
T. “Ted” Baker’s scabs had done following the 1948 strike on National Airlines.
The results were about the same.
In every single labor dispute in the modern history of aviation, with the single
exception of the Continental strike of 1983–85, management has always thrown
scabs out like dead rats when they became inconvenient. Every pilot considering
crossing a picket line should be acquainted with the sad historical fate of
scabs, and be reminded forcefully that airline managements change, and when they
change, the new boss owes scabs nothing. The new management does, however, have
to make a profit, which requires the cooperation of ALPA. As the scabs at United
found out after the 1985 strike, management has always left them to their
fate in the end. As every modern airline pilot capable of rational analysis
knows, pilots are just numbers to management. Scab pilots, however, are
embarrassing numbers.
Frank Lorenzo’s failure at Eastern was so complete that he was, for all intents
and purposes, finished in the airline industry. In 1986, he had taken control of
America’s third largest airline, which
was making respectable profits at the time, and a had a new concessionary
ALPA contract that was quite reasonable by industry standards. By the time Judge
Lifland summarily canned him, Lorenzo had reduced Eastern to a shadow of its
former self, primarily by selling off $1.5 billion in assets, while still
piling up huge losses. A failure more complete than Lorenzo’s is hard to find in
the annals of commercial aviation.
Nor was Eastern Lorenzo’s only failure.
Continental was a disorganized, debt-ridden mess, with the worst customer
service “image” in the industry. Lorenzo’s normally pliant board of directors
had become restless, largely owing to the fear that they might be held liable
for approving some of his more outrageous financial manipulations. Wall Street
analysts, once so high on Lorenzo because he had taken on the unions, now saw
him as a liability. His money man, Michael Milken, who had bankrolled Lorenzo’s
ventures with junk bonds, was under indictment and would eventually be found
guilty and sentenced to 10 years in prison. Pressure mounted on Lorenzo to
resign from the active management of Continental.
In August 1990, Lorenzo sold his interest in Continental Airlines Holding (TAC’s
new name since 1989) to Scandinavian Air Service (SAS), for $30 million. He
signed a “noncompete” agreement that barred him from any role in the airline
industry for seven years.
“Hell, we’d have paid him $30 million to just go away,” said Pat Broderick, an
Eastern pilot whose “My Turn” article in Newsweek laid bare the damage
Lorenzo had done. In fact, when all the tabulations were complete, ALPA spent
about $200 million fighting the Lorenzo Wars—$70 million of it on Eastern
alone!
As for striking ALPA loyalist Wayne Dolan, fate had one more disappointment.
Trustee Shugrue reached a back-to-work agreement with the Eastern MEC that would affect about one-third of hard-core
strikers. Dolan, because of his seniority, received a bid to begin training on Jan. 18, 1991—the day Shugrue shut
the airline down.
“I was getting packed to go down to Miami,” Dolan recalls. “I got a phone call
from somebody, who said, ‘Don’t come.’”
For nearly 20 years, Frank Lorenzo had waged an absolutely unnecessary war on
labor that finally resulted in the destruction of one of the proudest airlines
in aviation history. During his career, he ruined thousands of lives. To win his
war with ALPA, he had to destroy himself—a pyrrhic victory in the classic sense.
The former wonder boy had become a pariah and a bad joke. Lorenzo must have
worried that his associates were winking and snickering at his pretensions
behind his back. The loser who dared to sit in the chairs once occupied by Bob
Six and Eddie Rickenbacker was completely humiliated. So great was his
humiliation that Air Line Pilot felt it unnecessary to do more than
mention his drunken driving arrest several months later. With Lorenzo
universally despised for the failure he was, ALPA concluded that refusing to
dwell on “King Lorenzo the Drunken” was a far more elegant way to emphasize his
downfall.
Dennis Higgins, who began the fight with Lorenzo back in 1974 at little Texas
International, adds one final story to illustrate the state to which Lorenzo had
fallen.
“A guy who was a day-one picket line crosser, an adamant scab who sang Lorenzo’s
praises, called me up when Hollis Harris took over Continental,” Higgins
recounts. “He said, ‘Well, now that that asshole is gone, are we ready to
organize this property?’”
“I said, ‘Jesus!’”
THE EASTERN STRIKE AND THE FALL OF LORENZO
“How do you spell ‘Pyrrhic Victory,’ Frank?”
1 In
a memorable public confrontation, Kennedy cursed his erstwhile committee
staffer, Phil Bakes, who had become Lorenzo’s CEO at Eastern: “This goddamned
deregulation. Phil, you doublecrossed me; you lied to me.”