The Eastern Bankruptcy Is Not the Fault of Unions

<i> Greg Tarpinian is director of the Labor Research Assn., a New York-based economic consulting firm. </i>

Eastern management has tried to place the burden of the company’s bankruptcy on its striking machinists. Many people wonder why workers would strike when they may lose their jobs. Have the workers lost their objectivity as a result of their ongoing fight with Frank Lorenzo?

A careful look at the events leading up to the strike suggests that it was the most rational course the machinists union could pursue. In fact, it was the only course open to it once President Bush decided not to assign an emergency board to help resolve the dispute. On March 3, after 16 months of fruitless negotiations, Frank Lorenzo had the legal right to abrogate his contract with the machinists and impose huge wage-and-benefit cuts of up to 50%. Eastern workers had been pressed to the wall and they acted.

Eastern’s attempt to blame the unions for its woes is designed to take Lorenzo off the hook. With or without the strike, Lorenzo has been steadily pushing Eastern toward bankruptcy. Indeed, bankruptcy was the final card he could play in his ongoing attempt to break the unions.

Eastern’s losses are not the result of high wages. In fact, Lorenzo’s non-union Continental Airlines, with the lowest labor costs in the airline industry, lost $573.6 million in the past two years. At the same time, unionized American and United airlines showed profits of $476.8 million and $599.9 million, respectively. Lorenzo has used Eastern as a cash cow to subsidize the rest of his Texas Air empire. Since Texas Air acquired Eastern in early 1986, Eastern has provided more than $700 million in financing, fees, loans and deposits to Texas Air. It has funneled more than $800 million to Continental to keep it afloat. Eastern has been stripped of 25% of its assets, including its profitable computer reservations system, 50 aircraft, and, shortly, its profitable air shuttle. The reservations system was sold to Texas Air for $100 million after Eastern’s own investment banker valued it at $250 million and outside analysts valued it as high as $500 million.


Over the past decade, Eastern workers have given up more than $1.5 billion in wages. Lorenzo has pounded them for more and, to add insult to injury, implemented the most anti-worker policies of any American company in recent memory. There are widespread reports of unjust firings, employee monitoring and surveillance. Management has refused to accept quality and cost-cutting improvements suggested by its employees that would have saved Eastern money and won it new passengers. Like workers in many industries across the country, Eastern workers have borne the brunt of the new push for “competitiveness.”

The depth of Lorenzo’s anti-labor policies can be gauged by the extent to which they have galvanized the work force against him. The pilots have honored the machinists’ picket lines because they too have been the object of Lorenzo’s aggressive management style. The pilots, flight attendants, mechanics and baggage handlers came together to stop him from dismantling the airline they helped build with millions of hours of hard work.

The Eastern strike is more than an action against an isolated union buster. It is also a response to airline deregulation, which has destroyed living standards and job security for workers throughout the industry and made air travel unbearable and often unsafe. Eastern workers are putting their jobs on the line to save themselves, the industry and the people they serve from corporate executives who pursue profits at any cost. They are forced to take a stand because the government won’t. The striking workers are the best hope for decent jobs on the ground, and sanity and safety in the air.

The strike has placed the Eastern workers in a stronger position to deal with Lorenzo in the course of bankruptcy proceedings than they would have been had they simply submitted to his extreme demands. At the same time it has demonstrated that Eastern is nothing without its workers. This should ensure that the unions are guaranteed a strong voice in current bankruptcy proceedings. And we should all listen to what they have to say.