U.S. Probing Texas Air Fitness to Carry Commercial Traffic

The federal government today announced a special investigation of Texas Air Corp. to determine whether the nation’s largest airline company and its management are “fit, willing and able” to carry commercial air traffic.

Texas Air, which is based in Houston, is the parent company for Eastern and Continental airlines. Together, these two carriers account for nearly 20% of the commercial airline market.

The investigation by the Department of Transportation came as the Federal Aviation Administration announced a civil penalty of $823,000 against Eastern Airlines because of “recurring trends” of violations of safety regulations.

Transportation Secretary James H. Burnley IV told a news conference the investigation of Texas Air Corp. will be completed within 30 days and is being conducted to determine whether the company is complying with federal regulations and whether its management is competent to operate commercial aircraft.

Burnley said that one reason for the investigation is the FAA’s fine against Eastern, which came just over a year after Eastern agreed to pay a $9.5-million fine in connection with other safety violations.

In addition, he said, the department’s concerns were raised after an examination of Texas Air’s financial filings with the Securities and Exchange Commission which showed the airline company to be “under substantial, increasing financial pressure.”

Texas Air Corp. had record losses since the beginning of 1987, Burnley said.

B. Wayne Vance, the department’s general counsel, said 15 to 20 government economists and auditors will focus on Texas Air Corp.’s financial records, management practices and the circumstances surrounding Texas Air’s purchase of Eastern and more recent attempts to shift Eastern assets away from the Miami-based airline.

In its order directing the 30-day investigation of Texas Air, the department said recent filings by Texas Air with the SEC suggest “a need to examine . . . (Eastern’s and Continental’s) financial fitness.”