On Eastern Airlines, families, coal, potholes, Bob Dylan – Letters to the editor

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Letters are welcome via e-mail to letters@economist.com

The tale of Eastern Airlines

Bartleby summarised a new book by David Bodanis on fairness in business (December 12th). The column narrated the story of Eastern Airlines by describing it as a corporation built by Eddie Rickenbacker, “who had granted mechanics a 40-hour week, profit-related pay and a pension”, but “when Frank Lorenzo took over the company in the 1980s, he cut wages, alienated the staff and pursued a policy of asset-stripping the company. The workers went on strike in protest and Eastern went bankrupt.”

However, Rickenbacker operated during a lush golden era of air travel. The government regulated air fares, and kept them high. Competition was genteel. Then along came the Deregulation Act of 1978, a sea change in the airline industry. New discount airlines sprouted up and airlines added flights to Eastern’s tourist-oriented routes to Florida. Ticket prices plummeted. Yet the unions refused to recognise these new financial realities. By 1986 Eastern Airlines was on the brink of bankruptcy. That’s when Frank Borman, a former astronaut and Eastern’s chief executive, asked me about a sale to my airline group. He told me he’d decided to sell to us because “the unions wouldn’t make the necessary changes.” When we took over, we thought the unions would understand that change had to come, but they continued to fight. In 1989, needing cash to continue operations, we sold the Eastern Shuttle to Donald Trump for $365m. That reality didn’t soften union intransigence; they fought on, so the airline sadly ended up being liquidated with tens of thousands of jobs lost.

Fairness is certainly a worthy subject of a business book. But Mr Bodanis has misunderstood our Eastern acquisition. It might have been better if he had mentioned our take on fairness. Our group was the first to eliminate cigar and pipe smoking, the first airline to provide stock incentive programmes to employees, and so on.

FRANK LORENZO
Former chairman of Eastern Airlines and former CEO of Continental Airlines
New York

Sizing households

It is not true that people in the western world only started to live in nuclear families after industrialisation (“Nuclear retreat”, December 5th). That is a popular historical myth. In western Europe, the average household size was fairly small long before the Industrial Revolution, below five people since the 16th century, if not earlier. In England rural families tended to be nuclear or only slightly extended. They certainly were not the big groups to which your article alludes. In Bulgaria, a country I studied in detail, the average household size was larger in the 1980s than in the 19th century, for the simple reason that the communist regime could not provide enough housing. Bulgarian peasants in the 19th century lived on small, individual farms, which were divided up once their sons married.

ULF BRUNNBAUER
Professor of south-east and east European history
University of Regensburg
Regensburg, Germany

A role for coal

After almost 18 months as chief executive of the World Coal Association, it does not surprise me to see negative headlines dismissing coal (“Make coal history”, December 5th). I was alerted to your story as I was giving a speech to the Indian government and industrialist stakeholders at a forum which reinforced that coal will continue to be significant in India’s energy mix; we discussed the preparations that will need to happen for its responsible usage. Similar themes were heard at meetings with ministers in South-East Asia. In fact, these sort of headlines are often disregarded by the coal-growth regions because dismissing coal is dismissing the right of developing and emerging economies to choose their own energy source to support development.

There is not one government minister or adviser in the key coal markets whom I have spoken to who wants to make the same mistakes as developed economies. Equally, they do…



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