Eastern Cancels Texas Air Deal

Eastern Airlines said today it reached an agreement with parent Texas Air Corp. to cancel a contract under which Eastern would have sold its Northeast air shuttle and related assets to an affiliate of Texas Air.

Eastern made the announcement in a brief statement but gave no reason for the move. Eastern’s unions had objected to the deal saying it was an effort to dismantle the carrier and cripple the unions. On Feb. 5, Texas Air said Eastern had agreed to sell the shuttle to a new Texas Air affiliate for $225 million in cash and notes. A federal appeals court recently overturned a lower court’s order halting the sale.