Sale of Eastern’s Shuttle to Trump Wins First OK

The U.S. Transportation Department gave tentative approval Wednesday to the sale of the lucrative Eastern Airlines shuttle to flamboyant real estate tycoon Donald J. Trump.

The price tag for the sale, which was announced in October by Trump and Texas Air Corp., Eastern’s parent company, is $365 million. The shuttle, Eastern’s only profitable operation, has hourly, non-reservation flights between New York and Washington and New York and Boston.

Observers have called the deal a coup for Trump, who probably would expand the shuttle’s service to Atlantic City, the East Coast’s gambling mecca. Trump owns two large hotel-casinos there and has a 12% stake in Resorts International, which is building a casino and hotel in Atlantic City.

The Transportation Department said it found Trump’s plans for operating the carrier to be sound financially and that his key personnel have the necessary managerial and technical skills. The Trump Shuttle still must pass a safety review by the Federal Aviation Administration before the sale can be completed.

The way was cleared for the transaction to move ahead when a federal court last month denied the objections of labor unions that challenged the sale as a union-busting tactic by Frank Lorenzo, chairman of Texas Air. The unions had maintained that the sale was part of a plan by Texas Air, which also owns non-union Continental Airlines, to dismantle Eastern.

Separately, industry sources said Wednesday that Eastern, in another divestiture move, is close to selling its operations at Philadelphia to USAir Group for about $80 million. Eastern, which has lost more than $1 billion in the last 10 years, in August eliminated service to 14 cities, closed its Kansas City hub and dismissed 12% of its work force.