Latin America

During the 1980's, Eastern Airlines was known for having some of the worst labor relations in the airline industry. After several years of trying to return the company to profitability and failing, Eastern's board of directors sold the carrier on February 23, 1986 to Texas Air Corporation, headed by Frank Lorenzo.

The first labor contract to come up for negotiations was with the International Aerospace Machinists(IAM), who represented their mechanics and ramp
workers. Lorenzo wanted significant changes and wage reductions. The IAM, led at Eastern by Charlie Bryan, wanted wage increases. In January 1989, the National Mediation Board declared the negotiations at an impasse, and the 30 day cooling off-period mandated by the Railway Labor Act started.

On March 4, 1989, Eastern Airlines mechanics went on strike, and the pilots and flight attendants refused to cross the IAM's picket lines. Eastern was grounded, and less than a week later, declared bankruptcy. Faced with a need to raise cash, Texas Air began looking at pieces of the airline which could be sold.

The profitable Shuttle operation had been sold to Donald Trump in 1988 (although the deal had yet to be approved by the DOT). The only other franchise of any value still held by Eastern was its Latin American routes, which had been purchased just a few years earlier from Braniff International.

American was approached in April 1989 to purchase the routes, however an actual agreement wasn't reached until December 1989. The final purchase price came to $300M, and covered 17 cities in Central and South America, as well as Continental's MIA-LGW route authority, which had been transferred from Eastern in 1987.

In late April 1990, the US DOT approved the route transfer, and AA started preparations for integrating the existing operation into AA's. While there were no aircraft included in the purchase agreement, AA did hire several thousand ground employees and several hundred flight attendants based throughout South America. Operations were phased in over a six week period, starting on July 1, and ending on August 15.

With the sale of Latin America, Eastern was a fraction of its size only three years earlier, when it had been the fourth largest U.S. carrier. Even with the proceeds from the route sales, Eastern struggled, and ceased operations on January 18, 1991. The strike with the IAM was never settled.

As they were for Braniff up until 1982, and with Eastern up until 1990, these routes remain some of the most profitable for American.