alexinwa
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What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 7:35 am

These two airlines folded before I really knew alot about the in's and out's of the airline industry (not that I know that much now)

It just seems that both were high-level world class airlines and then they fell apart. What was the main cause?
You mad Bro???
 
NIKV69
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 7:37 am

Not sure about Pan Am but Frank Lorenzo singlehandedly destoyed Eastern. My dad had 25 years with them when it all went bad. Shame, that was a nice airline.
Hey that guy with the private jet can bail us out! Why? HE CAN AFFORD IT!
 
NIKV69
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 7:41 am

Here ya go, this says it perfectly. It's people like him that ruined good airlines.

R.I.P Eastern

http://www.centennialofflight.gov/essay/Dictionary/lorenzo/DI131.htm
Hey that guy with the private jet can bail us out! Why? HE CAN AFFORD IT!
 
Av8rDAL
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 7:56 am

A rather short blurb on Lorenzo, but sort of sounds like corporate raider Carl Icahn and TWA. I should probably research that some more.


Maintain thine airspeed, lest the Earth rise up and smite thee.
 
Thrust
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 8:14 am

Eastern is already accounted for. The amount paid to Boeing by Pan Am to launch the 747 project sucked a lot of life out of the airline. The fact that the 747s were flying half-empty in the early/mid-1970s and the oil crisis were factors in the Pan Am demise. Pan Am was also hit hard by the airline deregulation act, and had to sell off its Pacific division to United in the late '70s/early 80's. It's struggle to regain its market share over the transatlantic failed, in part I think because of Pan Am Flight 103. Remember, TWA and Pan Am were airlines which hijackers primarily targeted. I don't think this helps fully explain Pan Am's demise. Their story is similar to TWA's. While TWA didn't go down, its role as a huge airline slowly collapsed the way Pan Am's did.
Fly one thing; Fly it well
 
NIKV69
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 8:21 am

Enter Frank Lorenzo in yahoo and it brings all the articles up, what he did was basic, he bought struggling airlines once deregulation hit and the LCC carriers started to sprout up. He used bankruptcy to get around unions and then bought Eastern and tried to strong arm their union, which backfired in his face, they went on strike and then when Eastern couldn't pay it's bills they were gone. He was a horrible man, from the old school of working his employees like slaves for low wages and no union. His ideas were so against the airline concept. Thus he destroyed a great airline and almost started another, thank God he was stopped from doing it..
Hey that guy with the private jet can bail us out! Why? HE CAN AFFORD IT!
 
skytrain
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 8:35 am

Surely the tragic loss of Flight 103 over Lockerbie, Scotland in December 1988 did not help PanAm. I think that many people consider this one of the final straws in the demise of the airline; although it was certainly not the sole cause.

Cheers - Skytrain.
 
Ealsys1
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 8:42 am

The MACHINISTS UNION killed EAL. Specifically the power hungry Charlie Bryan in his never ending quest to either run Eastern or kill it if he couldn't run it!
 
gigneil
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 8:45 am

He used bankruptcy to get around unions and then bought Eastern and tried to strong arm their union, which backfired in his face, they went on strike and then when Eastern couldn't pay it's bills they were gone.

In the end, whose face did it backfire in? Sounds more like it backfired in the machinist's direction.

N
 
ERFly
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 8:46 am

EALSYS1 is right. Charlie Bryan and the machinists killed Eastern. His constant fight with Frank Borman led Borman to sell the company to in the 80 to Lorenzo. Lorenzo took over a dying airline.
 
PiedmontGirl
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 8:48 am

I've always had a theory that Charlie Bryan and Frank Lorenzo were so anxious to destroy each other that they were more than willing to destroy Eastern in the bargain.

Bryan and Lorenzo deserved each other. However, most of Eastern's employees did not deserve either one of them.
 
AmbiantAir
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 8:52 am

I just finished reading Skygods: The Fall Of Pan Am, written by a former Pan Am pilot, but told fromt he buiness side.

To boil it down hubris and horrible management killed Pan Am. In the early days Pan Am (or rather Juan Trippe) threw a lot of politcal muscle around to get what Pan Am wanted. That left presidents from Truman to Carter unfavorably disposed to Pan Am. Resentful actually, so Pan Am never gained what it needed, a domestic network to feed its overseas routes.

Starting around 1971 or 1972 Pan Am started losing money. And never stopped except for two years. It started selling off its route structure which only further weakened it. This includes selling its entire Pacific network (its only profitable network) to United for $400 million, while keeping its Atlantic routes (which were losing money every day) which were already heavily traveled and heavily competitive. Pan Am started losing bucket loads of money and never stopped, especially after they acquired National in a very lame attempt at getting a domestic carrier (National was a regional Florida airline....and had no extensive domestic network).

In the end Lockerbie was the final nail. Already people were steering clear of such a high profile target for terrorism against America. The Gulf War One came. After that their planes were empty.

Then Delta bought them.

The last flight was flown from the Carribbean to Miami.
 
Ealsys1
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 8:52 am

PiedmontGirl,

The animosity and chaos started in the 70's. Well before Lorenzo got involved. Bryan used Lorenzo to galvanize the rank and file and ultimately lost them their jobs. He represented his selfish ambitions not those whom he "represented".
 
Ealsys1
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 8:54 am

PiedmontGirl,

What was your perspective as an employee of the competition. Would love to hear additional thoughts.

Sam
 
NIKV69
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 8:57 am

No the Machinists did not kill eastern, the union did what it was there to do, fight for the rights of its employees, Lorenzo wanted big pay cuts and they would have no part of it. Lorenzo wanted to get rid of the union from the beginning. So he could bring in $7 an hour workers with no benefits and work them to death. It's wrong and a strike was the only way. In the long run it hurt a lot of people, I am glad my father was hired by another airline and we weren't effected as bad as some others but it solved one thing, it ran Lorenzo out of the business, which had to happen..
Hey that guy with the private jet can bail us out! Why? HE CAN AFFORD IT!
 
clipper707
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 9:07 am

The name Ed Acker should be noted. He is the person responsible for the fall of the grand lady (PAN AMERICAN WORLD AIRWAYS.) He was the president of Braniff (out of business) then the president of Air Florida (out of business) then to Pan Am (out of business) He wasn't a well liked person when it came to labor situations. He was also the ceo at United Airlines for a while and they had to file chapter 11. Not a very good track record. I truly believe that if Acker didn't have anything to do with Pan Am, she would still be flying..

clipper707
The Clippers Gone But Not Forgotten
 
PiedmontGirl
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 9:07 am

EALSYS1:

I knew that Eastern had problems, bad ones, long before Lorenzo came on the scene.

I am of the opinion that Charlie Bryan was delighted when Lorenzo showed up because it gave him a catalyst to work the rank and file into a lather.

Charlie Bryan never did actually represent anybody other than himself, I don't think, and Lorenzo didn't really care what happened to Eastern. Either one of them individually was bad enough. Together, they spelled the end of Eastern airlines.

There are still a handful of former Eastern mechanics working for various airlines who still carry Charlie's attitude around with them. They have not yet figured out that it's deadly.
 
ORDnDFW777
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 9:12 am

Poor management and high costs.
 
Motorhussy
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 9:20 am

In the northern summer of 1973 we, as a family, flew round-the-world with both Pan-Am and TWA.

This was while the Red Army Faction and the Baader-Meinhof were in full swing. State sponsored terrorism was at its most brutal and the two international American airlines were key targets.

It was quite an ordeal as every passenger boarding at Fumicino, Orly, Frankfurt etc had to be individually body frisked. Airports were potential and actual battlegrounds - well armed quards and soldiers stood sentry at every post.

This did not help Pan-Am's fortunes.
come visit the south pacific
 
BR715-A1-30
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 9:40 am

He went to Columbia University and then received a business degree from Harvard Business School in 1963.

Who the hell gave him this degree. They should have their teaching license revoked. Or SHOULD HAVE had their licenses revoked.

BTW -- If you are interested in the inner workings of Frankie Lorenzo, I suggest you read Grounded: Frank Lorenzo and the Destruction of Eastern Airlines It is a VERY VERY good book.
Puhdiddle
 
timz
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 9:41 am

Whatever became of Charlie Bryan? (If I called him Charles Bryan nobody'd know who I meant.)
 
isitsafenow
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 10:03 am

I read a couple of books about the demize of EA. My conclusion is that the blame lies 60 per cent Lorenzo, 30 per cent O'Brian and the rest on the public staying away/competitors, like sharks, moving in for the kill after smelling blood i.e. a serverly wounded Eastern Airlines. ALSO

Martin Shagrue who was Easterns last CEO after Lorenzo was launched, wanted to start NEW EASTERN with 16 DC 9-30's based in IND in the mid ninties but he couldnt find backers. The planes were then leased to NW by the aircraft owners, which were banks and lending institutions.
If two people agree on EVERYTHING, then one isn't necessary.
 
NIKV69
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 10:52 am

He didn't care about Eastern, his MO was to buy struggling airlines,(Due to deregulation) and bust the union so he could pay his employees nothing, take away benefits and then compete with the discount fare airlines that were becoming popular, I mean a lot of Eastern's employees had worked there for a long time and had families to support, they fought him and they right for doing so. He was a terrible man, this wasn't a man who knew had to run an airline and was trying to cut costs with a modest pay cut, his business practices were terrible and he cared nothing about his labor force, that attitude will get you nowhere..Read about what he did to the other airlines including Continental, less pay, less time off, and more hours. Sweat shop anyone?
Hey that guy with the private jet can bail us out! Why? HE CAN AFFORD IT!
 
milesrich
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 12:18 pm

Deregulation killed both Eastern and Pan Am, when neither could compete in an unregulated environment. Their management was terrible. As another poster said, Pan Am started going downhill with the purchase of too many 747's, and then they made all of these abolutely terrible decisions, that exacerbated their decline. Selling the Pacific Routes, the LHR routes, and Intercontinental Hotels, all profitable and valuable, while holding onto the rest of the Trans Atlantic system was deadly. Then they bought National Airlines, right at the beginning of deregulation. National had a point to point route structure (the NE to Florida and Florida to the West Coast via IAH and MSY)and very little feed for Pan Am's International network. Lorenzo, then at Texas International, and Eastern bid up the price for National. Lorenzo made lots of money on the stock, and Pan Am got the booby prize. Lockerbie, as one poster put it, was just the final nail in the coffin. Pan Am's service could be the very best or terrible. Some of their employees remembered the days of Juan Trippe, and others treated you like they were doing you a favor to let you fly Pan Am.

Eastern is another story. From the inception of Jets, Eastern had a rocky financial existence. Before deregulation, they were burdened with a route structure with primarily short stage lengths. (Fares were based on mileage only, so the longer the route, the more profitable it was, since taking off and landing take more time, and burn more fuel). During the middle 60's, they still had too many props, and served many small markets. The 70's brought recession to the industry, and recovery only started about the time of deregulation in 1978. Then things really got tough, because low cost competitors, all of which eventually failed, like Peoples Express and Northeastern Air, started flying from the Northeast to Florida at very low fares. These routes were Eastern's bread and butter. They never had the east west business traffic. Even in the South, until deregulation, they didnt fly west of Ft. Worth. Out of Atlanta, they had to compete with Delta, and they just weren't up to it. Dirty airplanes, a lower quality of service, etc. Delta gained its reputation because they were competing with Eastern, not American or United, (except from Dallas to the West Coast). Then Eastern had union problems, primarily with Charlie Bryant, (the Martin Sheen character in Wall Street). Bryant was the poster boy for everything that Republicans say is wrong with unions. He didn't care about his employer, but only how much he and his members would get paid for as little work as possible. But Eastern's management was terrible too. Frank Borman was the head honcho. While he was not part of it, there was graft in their purchasing department like Food Service, in Miami. Quality was not king, but payoffs were.

Comedian Alan King started WHEALS (We Hate Eastern Air Lines) is the early 60's because of their lousy service. Eastern really never beat that reputation.
 
NIKV69
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 12:24 pm

Eastern did get hurt by the LLC grabbing routes to FLA, but I feel a better management team could have saved the airline, the employees just wanted fair pay and many of them were very loyal. R.I.P Eastern, I flew many of your L-1011's and my day left alot of blood and sweat in your hangars..
Hey that guy with the private jet can bail us out! Why? HE CAN AFFORD IT!
 
elwood64151
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 2:05 pm

Both Eastern and Pan Am tried to expand agressively into markets they didn't understand following deregulation.

Eastern got away from its East Coast stronghold, even allowing it to lose some of its attractiveness. Further, better planning decisions at DL and increased competition from the likes of airlines such as Air Florida, combined with the fare wars of the late '80s and early '90s, all seriously damaged Eastern.

Pan Am bought the original National Airlines. They failed to integrate it with their international routes, and again did not fully understand the domestic market. Pan Am had a significant amount of government traffic, but when faced with the onslaught from Laker, BA, TW, AA, UA, etc., and each of those airline's integrated domestic/international route systems, they simply could not compete.

That's actually quite a short answer. There were a lot of variables, but those had a lot to do with it.
Those who fail to learn history are doomed to repeat it in summer school.
 
Prinair
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 5:57 pm

Having worked at EA...

I would blame 40% Lorenzo....
and 60% Bryan and his union goons...

Bryan used to laugh at EA management and actually brag that one day he would be president of EA.  Nuts

It was a wonderful company to work for ....

I hope that someday they both get what they deserve... Pissed
PRINAIR : Puerto Rico International Airlines
 
sllevin
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RE: What Caused PanAm & Eastern To Fail?

Sun Feb 01, 2004 6:15 pm

I've always had a theory that Charlie Bryan and Frank Lorenzo were so anxious to destroy each other that they were more than willing to destroy Eastern in the bargain.

I think that actually sums it up quite well!

Steve
 
Ealsys1
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RE: What Caused PanAm & Eastern To Fail?

Mon Feb 02, 2004 4:54 am

NIKV69,

If you believe that Lorenzo alone brought about the eand of Eastern, you were probably not old enough to know what was going on in the 70's and your father was a machinist. Eastern was SICK due to Charlie Bryan and Frank Borman bending over to him at the negotiating table. You are correct that Lorenzo bought it because it was struggling. He also did some good. After looking at what he bought, he saw that the airline was bleeding cash so he took System One, a profiatble part of the company that the machinists plundered (Check the money SYS 1 employees lost vs. the IAM) and made System One a wholly owned subsidiary of Texas Air. MY father still has his Eastern Airlines seniority now with EDS. If Lorenzo does not do this. All System One employees would have been victims of Charlie Bryan and his never ending quest to Run It or Kill It.
 
Ealsys1
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RE: What Caused PanAm & Eastern To Fail?

Mon Feb 02, 2004 4:58 am

Also,

Don't forget the nail in the coffin! Once AA circled in to MIA, Eastern had NO chance to survive!
 
alexinwa
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RE: What Caused PanAm & Eastern To Fail?

Mon Feb 02, 2004 1:54 pm

I know PanAm had hubs in JFK and MIA near the end....what about Eastern?? ATL was one, and more of a "focus" city in MCI???
You mad Bro???
 
chgoflyer
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RE: What Caused PanAm & Eastern To Fail?

Mon Feb 02, 2004 2:14 pm

Unions really hurt both companies... the IAM are not really what I'd call airline builders. There is a reason why Carl I. and Frank L. are able to get their death grip on these companies.
Will someone please wake me up in 4 years
 
DB777
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RE: What Caused PA And EA To Fail?

Tue Feb 03, 2004 12:23 am

AmbiantAir: "(National was a regional Florida airline....and had no extensive domestic network)."

Milesrich: "Then they bought National Airlines, right at the beginning of deregulation. National had a point to point route structure (the NE to Florida and Florida to the West Coast via IAH and MSY)and very little feed for Pan Am's International network."

Y'all need to read more. National was not a regional Florida airline. They had DC10-30 service from MIA to London Heathrow, Paris, Frankfurt and Amsterdam, non-stop (in addition to service through IAH and MSY) service from MIA to LAX and SFO and one-stop service to SAN and SEA. They had a fairly extensive route system up and down the east coast, serving New York (all 3 airports), Washington-National, Norfolk, Charleston, Savannah, Jacksonville, Orlando, Melbourne, West Palm Beach, Ft. Lauderdale, Ft. Myers, Sarasota/Bradenton, Tampa. Their east-west routes included Pensacola, Mobile, New Orleans, Houston, San Diego, Los Angeles, San Francisco, Las Vegas and Seattle.

National was a great airline, even with the strikes they endured, and their balance sheet was strong. Lorenzo and Texas Int'l tried to buy control of them and then Pan Am and Eastern joined in to create a bidding war where the winner overpaid for the airline. Pan Am could have started their own domestic routes under deregulation but they chose to buy National and then shut most of the domestic routes down one by one, destroying in a few years what the employees and management of National had built over decades.

EALSYS1: "Don't forget the nail in the coffin! Once AA circled in to MIA, Eastern had NO chance to survive!"

American did not really start their hub buildup at MIA until the latter part of 1989, when Eastern was trying to operate while the machinists were on strike and a shell of its former self. They bought most of Eastern's Latin American routes and London service and started moving from Concourse H to newly rebuilt Concourse D and Concourse E in 1989. AA reimbursed the airport a hefty sum to relocate 22 airlines' ticket counters and back offices so they could have a giant amount of counter space in the right location.

Don
Photographing aircraft since the Earth was flat and on Airliners.net since #338
 
Air1727
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RE: What Caused PanAm & Eastern To Fail?

Tue Feb 03, 2004 12:45 am

Got about 350 pages of blank paper and a good publisher?
In the Alaska bush I'd rather have a two hour bladder and three hours of gas than vice versa.
 
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RE: What Caused PanAm & Eastern To Fail?

Tue Feb 03, 2004 1:03 am

I've always had a theory that Charlie Bryan and Frank Lorenzo were so anxious to destroy each other that they were more than willing to destroy Eastern in the bargain.

Incorrect. Charlie Bryan, as others have pointed out, wanted to run Eastern Air Lines himself. His twisted thinking seduced others to think like him, asking for ridiculous contract terms each time negotiations began. He bucked management at every turn, beginning long before Col. Frank Borman came onboard, and continuing through Frank Lorenzo.

It was Charlie Bryan who singlehandedly brought about the destruction of Eastern Air Lines.

As Prinair, EALSYS1 and others will likely attest, the company wouldn't have been sold to Frank Lorenzo in the first place if Bryan's massive ego had permitted him to see that EA desperately needed some wage and work-rule concessions from the IAM.
"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group
 
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RE: What Caused PanAm & Eastern To Fail?

Tue Feb 03, 2004 1:14 am

Eastern did get hurt by the LLC grabbing routes to FLA

Once again, incorrect. There was minimal LCC competition to EA; it came primarily in the form of other mainline carriers competing with EA over their strong Northeast/Florida East Coast routes.

"In this present crisis, government is not the solution to our problem - government IS the problem." - Ronald Reagan

Comments made here are my own and are not intended to represent the official position of Alaska Air Group

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