Case Study: Eastern Airlines

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Eastern Airlines, once one of the largest iconic airlines in the industry, known for its growth due to The Air Mail Act of 1934, also became known for it’s power struggles and a an ongoing to war with themselves, precisely between management and workers. Like many carriers in the industry during the 1970’s and 1980’s, Eastern was subjected to difficulties due to deregulation which brought on competition within the market, airfare wars as well as waged wars against competitive rivals and in-house management. During those times mostly all industry carries struggled to keep their business up and running and out of bankruptcy, however many lost the battle and were subjected to hostile takeovers, mergers as well as eventually closing their doors …show more content…
Rickenbacker believed in the growth of the company through the growth of its people. His main focus was improving salaries, working conditions, increasing and improving maintenance and passenger service, and providing stock options to the employees. After the acquisition of Eastern by Rickenbacker and his partners he continued to operate under the same work ethics as when he was just the general manager. Rickenbacker’s work ethics and operational philosophies allowed Eastern to be the first airlines in the industry to operate without governmental assistance (subsidies). During his 25 years of head of Eastern, the company never operated in the red and profited each year. They were able to pay their investors and employees reasonably both before and after WW all without assistance from the government and taxpayers dollars. Many would say the success of Eastern was due to Rickenbackers management and the hard working persona he brought to …show more content…
As a result Frank Lorenzo took over operations and demanded lower labor cost with wage cuts and layoffs in order to save the company. Despite the merger with Texas Air, Continental went into bankruptcy in order to reorganize and get out of existent contracts. With lower wages restrictions and expansion to the eastern, western and the Great Plains region due to actuation of People Express and Frontier, Continental became one of the largest airlines in the United States. As a result of Lorenzo’s success with Continental, he was able to acquire Eastern and in doing so brought the same concepts, reorganizing tactics and financial planning to Eastern in an attempt to save the company and regrow it’s reputation within the

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