Eastern Air Lines

Eastern Air Lines' 1991 shutdown ended 65 years of aviation history and demonstrated how labor conflict can create positive feedback loops that destroy organizations. Frank Borman (the astronaut) couldn't save Eastern as CEO; Frank Lorenzo's Texas Air Corporation made it worse. The final collapse was a murder-suicide between management and unions that neither side survived. The mechanism failure was adversarial mutualism—labor and management needed each other but couldn't cooperate. Eastern's unions made concessions under Borman, then felt betrayed when Lorenzo acquired the company and extracted value through interline agreements with Continental (also Lorenzo-owned). The machinists' strike of 1989 was rational from each party's perspective but fatal to the organism as a whole. Pilots and flight attendants honored picket lines; the airline essentially stopped flying. Eastern's destruction illustrated the tragedy of the commons in corporate form. Each stakeholder group—management, unions, creditors—optimized for its own interests while destroying the shared resource. Lorenzo transferred valuable routes and gates to Continental; unions refused concessions that might have saved the company; creditors pushed for liquidation rather than reorganization. The bankruptcy trustee Martin Shugrue managed a zombie airline for two years, but Eastern was already dead. The brand, routes, and gates were absorbed by competitors, demonstrating how corporate death redistributes resources to surviving organisms rather than destroying them.