Judge Says Eastern in Contempt for Attempt to Sell Air Shuttle

Eastern Airlines Inc. was held in contempt of court Thursday for taking steps to sell its Eastern Air Shuttle to its parent company, Texas Air Corp., for $225 million.

U.S. District Judge John H. Pratt ruled that the financially troubled Miami-based airline had flouted his July 2, 1987, injunction directing Eastern to maintain the status quo under its contract with a union that represents 12,000 employees of the airline.

The preliminary injunction was issued last summer after the International Assn. of Machinists and Aerospace Workers, AFL-CIO, challenged Eastern’s plans to transfer ground crews and baggage handlers to a new subsidiary called Air Ground Services Inc.

At the time, Pratt ruled that the proposed transfer of 6,000 IAM members to the new subsidiary could not take place unless Eastern bargained with the union.

In Thursday’s opinion, Pratt said the Eastern’s financial troubles “do not change the fact that it proposed (another) ‘spinoff’ of the air shuttle . . . in clear violation of our July 2, 1987, order, which, whatever doubts Eastern had as to its meaning and application, it made no attempt to have clarified or modified.”

The judge noted that Eastern announced the deal a day after it dropped its appeal of the preliminary injunction.

Pratt scheduled a March 18 hearing to determine what sanctions should be imposed against the airline.

“The court’s order today sends a message to Texas Air that it is not above the law and it too must comply with the Railway Labor Act,” the union said in a statement from its District 100 headquarters in Miami.

An airline spokesman, Robin Matell, said: “Eastern’s view is that the court’s ruling is incorrect and we intend to file an expedited appeal. . . . We are confident the court will rule in our favor.”

Pratt agreed with the union’s claim that steps taken last month toward the sale of Eastern Air Shuttle to Texas Air for $225 million amounted to a change in the status quo of the machinists’ working conditions and therefore violated the injunction.

The sale was announced last month pending Federal Aviation Administration approval, which is not expected for at least another month.

“We find that the proposed ‘spinoff’ of Eastern’s air shuttle operations . . . is not fundamentally different from the proposed ‘spinoff’ of Eastern’s fleet services employees to Air Ground Services” that was barred last summer, the judge said

The judge also determined that the “proposed transfer to Texas Air significantly changes the working conditions of IAM members” and is therefore a major dispute under the Railway Labor Act.

The judge accepted the union’s contention that spinning off the air shuttle could undermine the machinists’ bargaining position with the company. If less than 50% of the spinoff company’s employees opt to join the IAM, machinists who transferred to the new subsidiary from Eastern would be without union representation, the judge noted.

“Since Texas Air would be in control of the Air Shuttle operations including its labor policy, it will control the hiring,” the judge said. “It can thus manipulate the composition of its employees and alone determine whether such employees will qualify for union representation.”