20 years later, greed still ruinous

This week marks the 20th anniversary of the strike and bankruptcy that led to the dramatic collapse of Eastern Airlines.

I marked the anniversary a couple of weeks early by recycling two boxes full of court documents, interview notes and lists of long-disconnected telephone numbers that I collected while covering the story for The Atlanta Journal-Constitution.

I'm not sure why I kept that stuff in my basement so long. Maybe I thought I would write a book, as several others did. But the Eastern saga consumed nearly two years of my professional life, and I decided that was enough.

It was a great story, though: A titanic struggle between labor and management and, more significantly, between Main Street values and Wall Street values. It also was a soap opera with a colorful cast: Frank Lorenzo, Donald Trump, Peter Ueberroth, machinists' union boss Charlie Bryan and the best lawyers money could buy.

About the only time I ever think of Eastern Airlines anymore is when I notice the logo on the little glass salt and pepper shakers on our kitchen table. The shakers were once used in the first-class cabins of Eastern jets. I bought them at the airline's salvage sale.

Had my basement not needed cleaning, those boxes might have sat there a few more years. But going through them made me think about how, in many ways, that old story is as relevant as today's headlines.

Eastern was one of America's great companies — a pioneer of the skies and the free world's largest airline, serving 26 countries on three continents. But Eastern also had a long history of labor-management distrust, and that escalated after airlines were deregulated in 1978 and Lorenzo acquired the company in 1986.

I was at Eastern's headquarters in Miami when pilots, mechanics and flight attendants went on strike March 4, 1989. I worked around the clock for days, thankful for an all-night Cuban restaurant and a new device I rented called a cellular telephone. It was as big and heavy as a brick, but it was a handy tool for a reporter on the move.

Five days after the strike began, Eastern sought bankruptcy protection. Using a legal loophole, Eastern's lawyers filed their case in New York City, expecting favorable treatment from the court.

I spent many days over the next year in a courtroom with a million-dollar view of New York Harbor. Watching legal legends such as Harvey Miller, David Shapiro and David Boies spar was like a master class in bankruptcy law.

At one point, Ueberroth, the Los Angeles Olympics organizer and former baseball commissioner, tried to buy Eastern. Then Trump bought the airline's prized East Coast Shuttle, announcing the deal at a press conference in his glitzy Plaza Hotel.

The unions had long complained that Lorenzo was stripping Eastern's assets to benefit his Texas Air Corp.'s non-union airlines. After a year in bankruptcy, the court finally lost patience with Lorenzo and took Eastern away from him.

By then, though, it was too late. Eastern grounded its planes in January 1991.

Lorenzo left the airline industry, and the U.S. Transportation Department banned him from ever returning. An editorial cartoonist drew him on a psychiatrist's couch, with the doctor telling him, "You're not paranoid Mr. Lorenzo; everyone does hate you." Conservative columnist William F. Buckley complained that Lorenzo gave capitalism a bad name.

I didn't throw out everything from those Eastern Airlines boxes. I kept a few souvenirs, such as the "No Lorenzo" and "We will survive" buttons that strikers and strikebreakers wore with equal zeal. And, of course, I kept my yellowed newspaper clippings, as well as a dozen or so interview tapes — just in case.

At the end of the Reagan decade, much of the public saw Eastern's union workers as dinosaurs trying to cling to high pay and pre-deregulation work rules as the world was changing around them. The unions deserved some blame, at least for the conditions that allowed Lorenzo to take over Eastern.

But others saw the Eastern saga as a real-life version of Wall Street, the hit movie from a couple of years earlier. The similarities were amazing. About all you had to do was change the names of the characters: Michael Douglas as Frank Lorenzo and Martin Sheen as Charlie Bryan.

As in Oliver Stone's film, the collapse of Eastern Airlines showed what can happen when greed and manipulation trump sound business practices, when short-term profit overshadows long-term value and when the bottom line is all that matters.

Michael Douglas' most memorable line in Wall Street is this: "Greed is good!"

The past few months, if not the past three decades, have shown us that greed is not good when other forces aren't there to keep it in check. Merger mania and a lack of ethics and oversight have given us banks and corporations too loaded with debt to work and too big to fail. The money men have stuffed their pockets and left the rest of us to clean up the mess.

We should have seen it coming.