Eastern ‘Is Not for Sale,’ Lorenzo Says

Texas Air Corp. Chairman Frank Lorenzo said Thursday that the company is studying ways to restructure its troubled Eastern Airlines subsidiary but has no plans to sell the operation.

He did not offer any specifics of what changes might be in store for Eastern, which is saddled with bitter labor relations and recently passed a two-month government safety investigation.

Speaking at the company’s annual meeting, Lorenzo told shareholders that despite the persistent labor agitation and financial troubles at the Miami-based airline, “Eastern Airlines is not for sale.”

But he placed a price tag of sorts on the airline by disclosing that a recent study by Texas Air found that Eastern had a net-asset value of $2 billion, or nearly $50 for each Texas Air share.

Net-asset value takes into account debts and liabilities, and includes items such as aircraft and airport terminals.

Several analysts declined to put their own estimates on Eastern’s value, but Timothy Pettee, at the investment firm Bear Stearns & Co., estimated Eastern’s net-asset value at closer to $500 million.

Stock in Texas Air, which also owns Houston-based Continental Airlines, closed up 12.5 cents to $12 a share on the American Stock Exchange.

Lorenzo, who controls 34% of the voting power of Texas Air shares, said management was looking at ways to improve shareholder values but declined to specify any actions under study.

However, the company announced later Thursday that the board had adopted an anti-takeover plan aimed at making a hostile buyout prohibitively expensive.

Under the plan, Texas Air stockholders would be able to acquire for half price shares in any company that buys 25% or more of Texas Air’s common stock and later acquires Texas Air, or in any company that acquires more than 50% of Texas Air’s assets or earnings power.

“The board . . . has taken this step because, among other things, the common stock of the company is currently selling for a very low price in relation to per-share value of the assets of the company,” Charles T. Goolsbee, senior vice president, said at a news release.

Goolsbee said the plan was intended to encourage any bidders who might emerge to negotiate “a fair price” with the board.

Together, the Texas Air carriers have a debt of about $5.4 billion. The parent company posted a record after-tax loss of $466 million in 1987.