Holders Back Eastern Merger Amid Turmoil
During a turbulent meeting interrupted by union members opposing the acquisition of Eastern Airlines by the Texas Air holding company, Eastern shareholders on Tuesday approved the merger, the last step needed before the deal is completed.
The combination with Eastern will make Texas Air, which also owns Continental Airlines and New York Air, the nation’s second-largest airline company, as measured by passengers carried and by revenue. However, Texas Air is also in the process of acquiring People Express and, once that deal is completed, it will be bigger than United Airlines, now the largest air carrier in the Western world.
Tuesday’s special meeting took place the day after a U.S. district judge in Miami refused to postpone the session as requested by a coalition of Eastern’s labor unions, which had offered to buy the financially ailing airline for $11.50 a share, more than the price offered by Texas Air.
In their court filing, the pilots, machinists and flight attendants unions said that company directors had acted too hastily in accepting Texas Air’s merger offer and that the price of $10 a share amounted to a “fire sale.” Eastern responded by calling the lawsuit “an ill-timed, ill-conceived effort to disrupt the transaction.”
The two companies had agreed in February to the $676-million deal, which will be made final once Texas Air files with the authorities in Delaware, where Eastern is incorporated.
Foregone Conclusion
The meeting had been scheduled to last only about 15 minutes, since the outcome of the vote was a foregone conclusion--Texas Air already owns 51% of Eastern’s shares. But it quickly turned into a shouting match.
About 200 shareholders, many of them angry union members, attended. Charles Bryan, president of Eastern’s machinists union, spoke for about 20 minutes before Richard P. Magurno, Eastern’s senior vice chairman for legal affairs, asked him to wind up his speech.
When the fiery union leader insisted that it was his right to speak, he was given an additional five to 10 minutes. But when that was over, he still refused to sit down. Some shareholders loudly sided with Bryan, while others shouted that he should be required to stop talking.
Finally, Magurno proceeded with the business of the meeting while Bryan continued to talk. After the vote was completed, with 70% of the shareholders in favor of the merger, Magurno adjourned the meeting. Bryan then took the podium and spoke until the lights were turned off in the auditorium.
