Eastern Air Lines flew into oblivion last night.
After a 22-month struggle for survival, the bankrupt airline ceased all scheduled operations at midnight. Managers at airports throughout the Eastern system were told of the closing early last night and immediately began informing the airline's 19,000 employees, 696 of whom are in the Washington-Baltimore area.
The shutdown writes the final chapter for one of the oldest airlines in U.S. aviation, a carrier that throughout its 62-year history has been personified by strong leaders from World War I flying ace Eddie Rickenbacker to Frank Lorenzo. It also ends one of the most costly and contentious bankruptcy cases in recent history.
Eastern's demise, which has been rumored for weeks, is not expected to strand many passengers. The generally slow travel season should make it possible for most travelers holding Eastern tickets to find alternative flights on other carriers.
Company officials said yesterday the airline will help passengers holding Eastern tickets find flights on other airlines but that passengers would have to pay any difference in price between the Eastern fare and higher fares on other airlines. A company source said yesterday that Eastern has more than enough money in the special $50 million travel fund established to pay the claims of ticket holders.
American Airlines immediately announced it would honor Eastern tickets at no extra cost subject to seat availability. It was not immediately clear how other airlines would treat Eastern's tickets.
At the time it ceased operations, Eastern had 800 daily flights from 70 cities, but in the last days the airline was only able to fill half its seats because of the economy's downturn and the adverse publicity about its financial troubles. At the end, the airline was about two-thirds the size it was before entering bankruptcy.
Yesterday, Eastern was actively working to sell some of its slots -- valuable landing and takeoff rights -- at Washington National Airport, sources said. In the weeks ahead, the carrier will attempt to sell other valuable assets, such as its profitable Atlanta hub, its Miami maintenance facility and its remaining aircraft.
Although the airline ceased all scheduled operations, an Eastern source said the carrier would attempt to hold on to its federal license to try to take advantage of stepped-up military charter operations because of the Persian Gulf War.
How soon Eastern's employees would be out of jobs was uncertain. Company sources said many of the employees would have to be kept on to help with the shutdown: reservations clerks to help handle the refunds, mechanics to mothball the aircraft and others to provide security for the remaining assets of the shuttered operation.
The combination of rising jet fuel costs and a troubled economy helped seal the fate of a carrier that had been eaten away by the acid of bitter labor relations and bled dry financially.
Eastern may not be the last major airline to disappear because of the pressures on the airline industry. Both Continental Airlines and Pan American World Airways have filed for federal bankruptcy court protection. Others may follow, leaving an airline industry dominated by only a handful of carriers.
The shutdown, which wipes out one of the nine remaining national carriers, comes almost two years after long-simmering labor disputes erupted into a strike that temporarily grounded the airline and forced it into bankruptcy protection on March 9, 1989. As a result, many of its $1.2 billion in assets, including the Eastern Air Shuttle, were auctioned off. But in the end the airline's cash was draining away at a rate of more than $2 million a day.
One of the nation's first major carriers and a leading airline in the 1960s, Eastern never managed to compete once the airline industry was deregulated in 1978. It was hindered by high debt, a late conversion to jets, notoriously bad labor relations and an East Coast route structure that depended heavily on lower-priced vacation travel.
Eastern's final troubles began when the airline was struck by the International Association of Machinists in a bitter contract dispute with then-owner Frank Lorenzo. The airline was virtually grounded when Eastern pilots refused to cross the machinist picket lines, forcing the company into bankruptcy in less than a week.
Lorenzo was only one of a series of strong personalities with whom Eastern has been linked. After Eddie Rickenbacker, who founded the airline, there was astronaut Frank Borman, known to many for piloting the first flight around the moon.
But Borman's success as an astronaut was not matched in the corporate boardroom. Although he initially won major contract concessions from the airline's unions in return for a 25 percent share in the company, it wasn't enough. When he went for more contract concessions in 1986, it was the unions that ushered in the era of Frank Lorenzo. Given the option of granting concessions to Borman or having the airline sold to Lorenzo's Texas Air Corp., the unions decided on Lorenzo.
But almost immediately, Lorenzo and Eastern's unions picked up the fight where Borman had left off in a series of increasingly bitter confrontations that led to the strike two years ago. The unions charged later that Lorenzo siphoned off Eastern's most valuable assets, transferring many of them to Continental Airlines, which was also part of Texas Air.
By the time the strike began, Eastern's unions had turned their contract dispute into a battle between Lorenzo and all of organized labor.
Ironically, the night Eastern chose to shut down, the airline was carrying a heavy passenger load on many flights because of the Martin Luther King Jr. birthday holiday weekend. That was the case too on Flight 349 from Atlanta to Miami, one of Eastern's last.
"After 26 years with Eastern, this may be my last trip," Captain Dennis McMillen told the passengers a few minutes after the DC-9 took off.
Shortly before 10 p.m., as the aircraft began its descent into Miami, McMillen came on again.
"It has been confirmed that Eastern is shutting its doors and this will be the last trip for us. On a personal note it has been such an honor, a pleasure and a privilege serving you," he said with his voice breaking. "And I really want to thank you from the bottom of my heart for your loyalty," he said to applause and whistles.
At 10 p.m., on time, Flight 349 touched down on the runway, then accelerated and lifted off again to circle Miami, one last time.
Staff writer Martha M. Hamilton reported from Atlanta and Miami.
For passengers holding tickets: The carrier will retain employees to assist passengers holding Eastern tickets in booking travel on other carriers. Eastern will pay the value of the return ticket but will not make up the difference between the Eastern fare and the new fare.
Flight availability: Passengers should face few difficulties finding flights since most airlines are less than fully booked during this slow travel season.
Frequent fliers: Frequent flier mileage that has been accrued under Eastern's One Pass account will continue to be honored by Eastern's partner in One Pass, Continental Airlines. It was unclear what would be done about other incentive programs.