Long before its forced sale to Frank Lorenzo's Texas Air Corp. last month, Eastern Airlines was a house divided.
Much of the recent history of Eastern's labor relations has been written in acrimony. But out of that battleground came one revolutionary experiment in cooperative power-sharing by Eastern's management and unions.
In a contract agreement in December 1983, the unions representing Eastern's pilots, mechanics and flight attendants accepted seats on Eastern's board of directors, 21 percent of Eastern's common stock and a profit-sharing plan in exchange for wage reductions of between 18 and 22 percent.
Much of the unusual agreement was written by the International Association of Machinists. The hope on both sides was that, by giving the militant machinists union "a look at the books," management and union officials could reach a common understanding of Eastern's financial condition and operating stategies, thus cooling off the hostility that invariably arose between the machinists and the company on those questions.
In that labor contract, the union also won a far larger voice in controlling the day-to-day work of its members. Eastern agreed to reduce the number of its supervisors, giving the IAM authority to assign machinists to required tasks, verify attendance, sign time cards and see to other front-line duties. In return, the union agreed to streamline work rules so that even routine chores would not have to await the arrival of a designated machinist. If the changes did produce productivity gains, Eastern would keep more repair work inside its shops, rather than farming it out to cheaper installations outside the union's jurisdiction.
In an assessment of the Eastern contract published in the Harvard Business Review last winter, Robert Kuttner concluded that the experiment would not be easily copied in other hard-pressed industries. The circumstances were unique. "The situation was serious enough for both sides to put aside their mistrust and invent something genuinely new, but not so serious as to put the company under," he wrote. "Just in the nick of time, market conditions improved, making profit-sharing possible and vindicating the sense that something special had been accomplished."
Kuttner worried about what would happen once the novelty of power-sharing wore off, and after the easy productivity gains had been made. He concluded, however, that, "If unions still have a constructive role to play in society, then the Eastern-IAM model is too important to dismiss as a fluke."
But by the time his article was in print, the model was already coming apart. Randy Barber, a machinists union financial adviser, said that the cooperative spirit began to wash away in the summer of 1985, as Eastern's strong financial recovery began to peter out. From union leader Charles Bryan's standpoint, Chairman Frank Borman and the rest of Eastern's management were cutting the airline's profitability unnecessarily through ill-conceived fare reductions, setting up another crisis that inevitably would produce more demands for wage concessions. According to one source, Eastern considered Bryan's outlook on the airline's finances to be increasingly irrational.
The final act, as many saw it, was essentially a fight to the finish between Bryan and Borman. Associates say the hostility and suspicion between the two was as thick as mud at the board meeting that ended with the sale to Lorenzo.
At one point, Borman blew up at Bryan, according to the machinists leader. "I'm going to tell the world that you destroyed this airline," Bryan quotes Borman as saying. And the machinists leader responded, "I'll tell them you did it, so where does that leave us?"
Bryan said the machinists would make another round of concessions, but only if Borman were dumped.
When Eastern's board refused, the directors took the remaining option and accepted Lorenzo's offer.
But the outcome of the board meeting was not essentially the result of a blood feud between the union leader and the Eastern chairman, Barber says. In his view, Bryan had no alternative but to demand Borman's removal. "Charlie would have been strung up if he'd agreed to concessions without a new chairman," Barber said.
Despite their mutual animosity, Borman and Bryan were not waging a vendetta. Each was trying to achieve the best outcome for his constituency, in Barber's view.
"You basically have two cultures in confict," said one Eastern director and Borman supporter. "There is a point of some common interest, but you're facing life from two different perspectives, management and labor.
Here, the relationship was stretched as far as it could go. That's at least half of it. The rest is Charlie Bryan taking a stand, based on a lot of animosity and frustration."
This would be simpler to understand as a vendetta. That simplified version doesn't take account of the huge gulf between Borman's and Bryan's constituencies, however.
It may be possible to bridge that gulf, as the steel and auto industries are attempting to do. But when the cash is running out, as at Eastern, when the money that remains is sought by lenders, shareholders and employes, and when the crunch revives years of animosity, it is a bridge too far.