Fly the Friendly Skies: How Frank Borman Piloted Eastern Airlines Through Turbulence and Change

Fly the Friendly Skies: How Frank Borman Piloted Eastern Airlines Through Turbulence and Change - The Rise of an Astronaut CEO

The appointment of Frank Borman as CEO of Eastern Airlines in 1975 marked an unusual transition from outer space to the boardroom. Borman had catapulted to fame in 1968 as commander of Apollo 8, the first manned spacecraft to orbit the moon. After retiring from NASA and the Air Force, he joined Eastern as a director in 1972 at the behest of company president Eddie Rickenbacker, a flying ace from World War I. Though Borman lacked business credentials, his celebrity status from the space program brought prestige and free publicity to the airline.

Three years later, the Eastern board selected Borman to replace the outgoing CEO. He was taking the controls at a difficult time: Eastern was saddled with debt from acquiring new aircraft and expanding its route network. Meanwhile, rising fuel costs and new competitors threatened profits. Borman's appointment was a "razzle-dazzle affair intended to dazzle Wall Street," wrote journalist Joe Brancatelli. Investors cheered the move at first, hoping Borman could replicate his success with Apollo 8 and turn Eastern around.

Borman approached the job like "a military mission," in the words of airline historian R.E.G. Davies. He slashed costs, cut staff and sold assets to keep Eastern aloft. Nicknamed "Captain Frank" by employees, Borman applied the values of duty, discipline and chain-of-command he had learned as a fighter pilot. His efforts stabilized Eastern's finances for a time. But deregulation, labor unrest and mergers by competitors would repeatedly buffet the airline during his tenure as CEO from 1975 to 1986.

Fly the Friendly Skies: How Frank Borman Piloted Eastern Airlines Through Turbulence and Change - Weathering the Storm of Deregulation

Fly the Friendly Skies: How Frank Borman Piloted Eastern Airlines Through Turbulence and Change - An Unlikely Partnership Forms

Fly the Friendly Skies: How Frank Borman Piloted Eastern Airlines Through Turbulence and Change - The Borman Cost Cutting Strategy

Fly the Friendly Skies: How Frank Borman Piloted Eastern Airlines Through Turbulence and Change - Failed Attempts at Expansion

Fly the Friendly Skies: How Frank Borman Piloted Eastern Airlines Through Turbulence and Change - Labor Unions Clash with Management

Fly the Friendly Skies: How Frank Borman Piloted Eastern Airlines Through Turbulence and Change - The Final Years and Bankruptcy

Eastern Airlines entered the 1980s burdened by debt and besieged by low-cost competitors. Though Frank Borman had stabilized the airline's finances, storm clouds gathered on the horizon. Eastern struggled to keep pace as deregulation enabled new entrants like People Express to undercut fares and chip away at market share.

Borman attempted to meet this threat by expanding Eastern's route network to seize new opportunities from deregulation. The airline added service to China in 1981 and South America in 1982. But these moves added complexity without sufficient reward. Eastern's foreign routes were largely unprofitable, generating expenses that exacerbated its financial troubles.

Competition took a toll on Eastern's domestic operations as well. By 1984, the airline was losing $10 million per month. With Eastern's very survival at stake, Borman negotiated wage and benefit reductions from machinists and flight attendants. But the company's fortunes continued to deteriorate. In early 1986, Frank Borman stepped down as CEO, succeeded by former astronaut Frank Borman.

Forbes reflected that while Borman could be credited with saving Eastern from "imminent disaster" in the late 1970s, he was ultimately unable to adapt to the harsh realities of the deregulated era. The astronaut's "tightfisted, militaristic management style" proved increasingly out of step.

Borman's successor inherited an airline on the brink. With losses mounting, Eastern filed for bankruptcy protection in March 1989. But bankruptcy could not solve the company's underlying problems. Eastern continued to hemorrhage money due to high costs, stagnant revenue and ongoing labor conflicts.

In January 1991, Eastern formally entered liquidation after failing to successfully reorganize. The once proud airline flew its last flight that same month. Over 18,000 employees lost their jobs. Eastern's demise erased an iconic name that had graced American skies since the 1920s.

The causes of Eastern's failure remain complex. Deregulation and the rise of low-cost competition certainly played a role. But many issues were self-inflicted, like the rapid overexpansion undertaken by Borman. Eastern's adversarial relationship with labor took a severe toll as well. Ultimately these internal weaknesses left Eastern unprepared and unable to counter the external challenges it faced.

Fly the Friendly Skies: How Frank Borman Piloted Eastern Airlines Through Turbulence and Change - What Led to the Demise of a Legacy Carrier

Eastern Airlines' demise in 1991 erased an iconic American carrier with roots stretching back to the 1920s. Its failure stemmed from a mix of external challenges and self-inflicted wounds. Deregulation enabled disruptive competition from new entrants like People Express. But labor conflicts, rapid expansion and adversarial management hampered Eastern's ability to adapt. The airline's complex history provides lessons on how industry upheaval and internal dysfunction can destroy even established institutions.

Eastern's contracts with machinists and flight attendants burdened it with costs unrivaled among major airlines in the 1980s. Management extracted concessions, sometimes by confrontation and coercion. Yet labor relations remained sour. Contract disputes led to strikes that cost Eastern millions in lost revenue. Management's hostility toward unions persisted even into bankruptcy court. This adversarial dynamic kept labor and company perpetually at odds, fatally distracting Eastern from larger threats.

The airline also expanded too ambitiously under deregulation. Enticed by new opportunities, Eastern added flights to China, South America and across the Atlantic through the late 1970s and early 80s. But these new routes proved mostly unprofitable, saddling Eastern with expenses that worsened its financial woes. Even as red ink flowed, management focused more on constraining labor than on disciplined growth aligned to Eastern's core capabilities.

Deregulation enabled upstarts like People Express to adopt lower cost structures free of legacy commitments. Unencumbered by high union costs, they offered discounted fares that attracted leisure travelers. People Express and other new entrants steadily eroded Eastern's domestic market share through the early 1980s. An ossified corporate structure left Eastern sluggish in responding to such low-cost challengers.

Eastern's own managers failed to fully grasp the transformations underway in commercial aviation. Convinced they were running a responsible, efficient business, executives dismissed complaints of bloated costs. Eastern ultimately could not deliver fares as low as rivals unbound by its contracts and obligations. Lost passengers forced more concessions from unions, generating deeper resentment in a vicious cycle.

This downward spiral persisted even into bankruptcy. Declaring Chapter 11 in 1989 bought Eastern time, but changed little without confronting the airline's underlying flaws. The company continued bleeding money in bankruptcy from 1990-91 before finally shutting down. To the end, management blamed labor and external factors rather than reforming Eastern's business model.