'Moon Man' Turns Eastern Around

If past patterns hold, Dr. Julio Serrano and several of his colleagues on Eastern Air Lines' 80-member medical staff will drop their stethoscopes over Washington's Birthday and help unload baggage at the airports in Miami and Fort Lauderdale. Serrano, 43, pitched in last July 4, Thanksgiving and Christmas as Eastern struggled with holiday crowds. Says he: "I didn't think I would be handling baggage. But these are difficult times, and you have to adapt to circumstances."

The biggest circumstance to which Serrano and other Eastern employees are adapting is Frank Borman, the line's chairman. In little more than a year as chief executive, Borman has accomplished a remarkable turnaround. In 1975 Eastern lost nearly $50 million; last week it announced that 1976 profits hit a record $46.2 million. One reason: the relentless drive of Borman, a former Apollo astronaut, to cut costs and improve service.

So far, Borman has slashed 3,000 people from Eastern's payroll, including 26 vice presidents. He has moved the airline's brass from Manhattan's Rockefeller Center to barracks-like quarters in

Miami, the center of Eastern's operations, and banned alcohol at lunchtime and the use of limousines. Roughly 400 staff people are on "voluntary" standby during holidays to lug baggage off Eastern's planes when heavy traffic builds up the load. Says Borman, reverting to NASA-type language: "Everyone whose mission is not critical to the peak period goes out to help."

The 48-year-old Borman sets a personal example by neither smoking nor drinking, and by driving a 1969 Camaro. He has loaded baggage himself on at least three occasions. He has also taken on the role of pitchman, appearing personally in Eastern's ads to stress the line's concern for passengers.

Borman's most striking accomplishment was talking unions into accepting a wage freeze for all of 1976. That saved $32 million--a hefty portion of the line's profit. In return, employees got a delayed hike of at least 8% last month, as well as the chance to join a profit-sharing plan. Last year Borman proposed a "variable earnings program" under which employees could make up to 103.5% of their normal wages if profits warranted, but as little as 96.5% if the year was bad. Borman views the plan, not yet accepted by the unions, as necessary to break "the almost blind acceptance that annual raises are expected regardless of company performance."

Eastern was not alone in its turnaround last year. Profits of the eleven U.S. trunk carriers for 1976 are estimated to be about $330 million, a dramatic reversal from group losses of $97 million in the recession year of 1975. Traffic gains--10% for the industry--were one reason. Fare increases allowed by the Civil Aeronautics Board helped too; a further 2% increase will go into effect this month. But Borman views last year as only a respite. "The industry has not returned to health," he says. "We had a good year, but that's like saying that a man with a long-term illness got out of bed for a day."

Boy Scout Morality. Borman is the second famous aviator to head Eastern: the first was World War I Ace Eddie Rickenbacker. Nonetheless, Borman's astronaut fame was initially a disadvantage. When he began working as a consultant to Eastern, some colleagues dubbed him "the moon man" and distrusted his purely military background. His impeccable Boy Scout morality and reputed humorlessness also put off some fellow executives.

But Borman's hard-driving approach eventually made him a vice president, then president and finally chairman. Now he is addressing himself to the great fear among industry analysts that U.S. airlines will not have enough money to replace their planes as existing fleets age. Borman has an idea for that too: Eastern has petitioned the Government for permission to huddle with other airlines to work out the design of an economical jetliner for the 1980s. Other lines are cool to the idea, but it is an example of the fresh thinking that Borman is bringing to an industry that needs some.

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