Formation In the late 1980s, both
Eastern Air Lines and
Pan Am operated
air shuttle services in the
Northeastern United States, which were highly profitable even though the two airlines, as a whole, were not. As the financial outlook for Eastern became more pessimistic in the late 1980s, the carrier began to sell its routes and aircraft. It organized its profitable shuttle operation into a separate company, headed by Bruce Nobles, with the intent of selling it to raise cash. Eastern chairman
Frank Lorenzo met
Donald Trump at a party, and subsequently negotiated the sale of the shuttle to Trump for $365 million, more than the projected cost to start up a similar airline, but justifiable if the airline achieved a high market share. For that price, Trump got a fleet of 17
Boeing 727s, landing facilities in each of the three cities that the shuttle flew to, and the right to put his name on the company and its airplanes. The shuttle had previously been a
no frills operation for business travelers, but Trump announced that he would convert it into a luxury airline. After reaching an agreement with Trump in October 1988, Eastern filed for
Chapter 11 bankruptcy protection. Many passengers switched to the competing
Pan Am Shuttle, and the previously profitable Eastern Shuttle began losing money. Trump attempted to use the situation to negotiate a lower price and to acquire additional aircraft from Eastern.
America West Airlines submitted a more attractive competing offer on May 10, but failed as its financing was not in place. Trump's offer was approved by the bankruptcy court in May 1989. The new Trump Shuttle operation launched on June 8, 1989, and by the end of August had returned to a strong market share of 40–50%. Trump pushed to make the new shuttle a luxury service and a marketing vehicle for the Trump name. Its aircraft were newly painted in white livery and the interiors redecorated with such features as maple wood veneer, chrome seat belt latches, and gold colored lavatory fixtures. The airline also was a leader in the adoption of advanced technologies: It introduced some of the first passenger self-service check-in kiosks, in coordination with
Kinetics, at its LaGuardia base; and partnered with LapStop, a startup firm that rented laptop computers to passengers. The airline was also an early adopter of the
GTE Airfone in-flight telephone system. Both Trump and Pan Am spent millions on advertising campaigns around this time in an attempt to maintain strong competitive positions. During the
Gulf War of 1990–91, the airline received a government contract to ferry U.S. military personnel between the key domestic bases of
Dover AFB,
Charleston AFB,
Travis AFB,
McChord AFB, and
Kelly AFB.
Sale Trump had personally guaranteed $135 million of the shuttle's debt. Following the default, Citibank made arrangements for
Northwest Airlines to take control of the shuttle in exchange for relieving Trump's personal liability on its debt, and all sides were reportedly close to an agreement by April 1991. Bankers involved in the negotiations said that Trump would be relieved of at least $100 million of his guarantee, and possibly as much as $110 million, leaving him owing between $25 and $35 million in the closing out of his ownership of the company. == Helicopter service ==