James Robinson wrote:
"Reef Fish" wrote:


Eastern went belly up for reasons of incompetent Management!

There was more to the issue than simply the effectiveness or
ineffectiveness of management. Yes, there were many things the
management could have done better, but they were caught by a basic
change of rules (deregulation) and a legacy of high interest rates,
along with intransigent unions.

That change affected all the OTHER airlines as well. It's not as
if someone was picking on Eastern.


Eastern had purchased a large number of new aircraft when interest rates
were high, in anticipation of major expansion, and were therefore caught
with a high cost fleet when deregulation was dropped on them, along with
a the drop in interest rates which benefitted their competition.

That was exactly a MANAGEMENT decision! All businesses are gambles.
When Eastern put down a stack of chips better to win, or the football
coach decides to go for broke (no pun intended), and it didn't work
out, the buck (the blame goes to) stops at the Management. If the
gamble turned out rosy, the Management gets the glory.

There wasn't much Eastern's management could do to quickly bring their
costs in line with the low cost carriers that could lease low cost
aircraft at low interest rates, flown by pilots that accepted much lower
pay and fewer non-pay restrictions.

That's exactly what the Management has to consider -- something like
a backup plan or worst case scenario. If it's unable to cope with
a decision that didn't freak other airlines, then it was nobody but
the Management to bleme.

The higher the EXPECTED return, the high the RISK. Econ and Finance
101 students know that.

They had been flying along fat and happy, only to have the rules changed
out from under them at the same time as interest rates dropped. They
were trapped, with little chance of recovery, no matter how good their
management was.

You got that part wrong. :-) The Management WASN'T good, which was
why they put themselves into that BAD position. If half the businesses
decisions are based on hindsight, the bankrupcy courts would be
sitting nearly idle.

The only loser would be the guy that lost on a bet in a game, and
bet and lost again on TV replay. :0)

-- Bob.