Continental, Eastern Pass Safety Probe

The federal government Thursday gave an essentially clean bill of health to Texas Air and its flagship airlines, Eastern and Continental, culminating an unprecedented investigation of the airlines’ safety standards and the management fitness of the nation’s largest commercial aviation company.

More than 1,500 aircraft inspections, carried out over the last six weeks in response to mounting complaints about the two air carriers, found no significant safety problems at either of them, the Department of Transportation and Federal Aviation Administration reported.

“I have no question in my mind about the safety” of Eastern or Continental, Transportation Secretary James H. Burnley IV said at a press conference.

The investigation “confirms that these airlines are absolutely safe,” declared Texas Air Chairman Frank Lorenzo. “I’m glad it’s behind us.”

Nonetheless, federal investigators cited severe hostility and mistrust between Eastern’s management and its unions that they said could threaten safety in the future. In response, Burnley announced that he had taken the unusual step of recruiting former Secretary of Labor William E. Brock III as a mediator to try to resolve the disputes.

There is “a total lack of constructive communication” between the factions at the airline, a team of FAA investigators said in its report.

” . . . In a company so divided, the risk is increased that the labor-management discord will, at some time, either through inattention or design, have an adverse impact on the public safety,” the team said.

Losses Cause Concern

The government began its intensive examination of Texas Air and the two carriers in April because of concern over $466 million in losses last year. Also, Eastern was hit with a record $9.5-million fine in 1986 and an additional $823,000 penalty two months ago for alleged safety violations.

The special scrutiny was encouraged by Eastern’s unions, which have been locked in a dispute over wages and over Lorenzo’s plan to shift Eastern’s lucrative East Coast shuttle business to non-union Continental.

Capt. Hank Duffy, president of the Air Line Pilots Assn., contended that while the government report was positive for the company, it confirmed the management problems. He said that he hopes Brock will help “cut through some of the rhetoric that’s been going around here for the last few years.”

FAA Administrator T. Allan McArtor said that investigators conducted 7,700 hours of inspections of the airlines’ 630 aircraft and concluded that “an unsafe condition does not currently exist.”

Find Average Rate

About 7% of the Eastern inspections and 3% of Continental’s found some problem that resulted in temporary grounding of an aircraft, a rate generally in line with industry averages, officials said.

Burnley said that the examination of Texas Air’s fitness to operate airlines found it to be committed to quality and financially competent.

Burnley said that the judgment on the company, whose two major airlines and regional carriers fly one of every five airline passengers in the country, was based on an analysis by dozens of federal auditors, attorneys and investigators who interviewed hundreds of company workers and reviewed tens of thousands of pages of Texas Air internal records.

The finding marked a vindication for Lorenzo, whose attempts to cut costs and piece together smaller airlines in the age of deregulation have drawn the wrath of organized labor and prompted concern by Congress.

McArtor, however, warned that “the FAA will continue its heightened surveillance of Eastern” on a less intensive basis for at least two more months “to verify that there are no systemic problems” or a relaxation of standards.

Revenues Decline

The announcement of the federal investigation was a blow to the company, initially causing a drop in Texas Air stock and a decline in revenues as some travelers shunned the airlines.

Company officials said they hope that the new report will help repair the damage. “We still have to rebuild the bridges that were burned,” Lorenzo said.

Resolving the labor-management discord will be difficult.

Burnley said that Brock will concentrate on mediating safety issues between Eastern management and labor. Union members have complained that they have been forced to fly planes they considered unsafe.

Brock described his role as that of “a friend that sees a couple of other friends battling to the advantage of no one.”

Brock, who said Eastern and union officials already have responded favorably in initial contacts to his participation, added: “I have no direct experience in the industry. . . . My hope is that I can bring simply a sense of good will and a sense of concern . . . and find some ways that we can communicate.” A Transportation Department spokesman could not say if Brock would be compensated for his work.