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Companies that vanished: Eastern Air Lines grounded by deregulation, union buster

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This post is part of a series on some of the most memorable companies that have disappeared.

With soaring fuel prices and declines in discretionary spending leading to bankruptcies and mergers among the airlines these days, one might forget that such things have often occurred in that industry since its early days. Take Eastern Air Lines, one of the first and longest-running of the so-called trunk carriers in the United States.

Eastern began as a mail carrier for the U.S. Postal Service in the mid-1920s but through acquisition and expansion came to dominate much of the domestic travel industry along the profitable East Coast corridor by the 1950s. Back then the company was widely known for its famous president, former World War I Ace, Eddie Rickenbacker.

The airline thrived into the 1970s, when it was one of the "big four" major U.S. airlines. In its time, Eastern pioneered the use of a worldwide computer reservation system and the all-jet mainline fleet. However, the carrier struggled after the Air Transportation Deregulation Act of 1978. Former astronaut turned CEO Frank Borman finally relented to corporate raider and union buster Frank Lorenzo's buyout offer in 1985. Valuable assets such as new aircraft, the East Coast shuttle service, lucrative fuel operations, and the worldwide travel agent computer system were sold off or shifted to Lorenzo's other carrier, Continental Airlines (NYSE: CAL). Deteriorating labor relations forced Eastern into bankruptcy in 1989, at the time the largest airline bankruptcy in U.S. history. The carrier ceased operations the day after the start of Operation Desert Storm in 1991.

At its height, Eastern was the free world's largest airline in terms of passengers carried, serving 26 countries on three continents, including Madrid; Mexico City; Nassau, Bahamas; and London. It had large hub operations at airports in Atlanta, Boston, Kansas City, Miami, New York, and San Juan, Puerto Rico. Eastern was also the official airline of Disney World for many years.

Eastern's groundbreaking and popular East Coast shuttle featured hourly flights between New York, Washington D.C., and Boston. Seat reservations were not required and seat assignments were not given. Eastern guaranteed availability -- in the event of a full flight, Eastern simply added another aircraft to the schedule.

Recent rumors have suggested that a Miami-based group may have acquired the Eastern name and trademarks with an eye toward reviving the carrier, perhaps as soon as 2009.

Let us know in the comments what you miss about Eastern. And be sure to check out other Companies That Have Vanished.

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Last updated: July 05, 2009: 05:15 PM

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