
Eastern Airlines Bankruptcy (A): Texas A...
Bruner, Robert F.;...
Eastern Airlines Bankruptcy (A): Texas Air Corporation
Bruner, Robert F.; Del Guidice, Michael; Elson, Louis
F-1090 | Published August 24, 1995 | 39 pages. Case
Collection: Darden School of Business
Product Details
This series of cases provides teams of students the opportunity to obtain control of Eastern Airlines through reorganizing the firm in bankruptcy. Eastern, an unprofitable company for nearly two decades, filed for bankruptcy in the wake of a series of financial setbacks and deteriorating labor relations, caused in part by the aggressive management of Frank Lorenzo, who acquired the firm in 1986. At the date of this exercise, Lorenzo (via Texas Air), the unions, the creditors, and a potential new investor (the Ritchie Group) are jockeying for control of the firm. The task for any would-be owner is to devise a financial reorganization of the firm that satisfies the court and, indirectly, to creditors and unions. The B, C, and D cases represent the other players. The four cases in this exercise may be taught singly, or combined into a joint-negotiation exercise in which students are assigned roles to play. The student teams must value the assets of Eastern Airlines, prepare a financial-reorganization strategy, develop a negotiation strategy, bargain with counterparties, and attempt to consummate a transaction that best serves their own needs.
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