Eastern Shuttle Should Lure Several Suitors, Analysts Say

Eastern Airlines’ lucrative shuttle service, for sale again, should attract a number of bidders, including most of the nation’s major air carriers, industry analysts said Tuesday.

“Think of any of the majors and only Pan Am would be precluded from buying the service because it already has its own shuttle,” said Robert Decker of Duff & Phelps. “I would expect there will be plenty of bidders.”

Eastern said it was seeking new buyers for the shuttle after real estate developer Donald J. Trump said Monday that he would not pay the $365 million he agreed to in October.

Trump said a massive strike at Eastern, which has shut down most of the carrier, had made the shuttle, which links New York with Washington and Boston, worth a third less. He said he wanted to cut the purchase price by $125 million to $165 million.

The shuttle is one of the few Eastern services still flying after the March 4 strike of machinists, but it has seen a sharp fall in the number of passengers.

Analysts noted that the shuttle is an attractive operation for a takeover because it functions essentially as an independent operation not dependent on traffic from other flights for business.

“That means it could fit into almost anybody’s system, although there are some complications with unions and the like,” said Louis Marckesano of Janney Montgomery Scott in Philadelphia.

Marckesano said carriers such as American Airlines, USAir, Trans World Airlines, United, Northwest and Delta likely would find the shuttle attractive.

Decker said that, of those carriers, Delta and United have the lowest market share in New York and therefore might be most interested in the shuttle.

Continental Airlines, Eastern’s sister in Texas Air, could try to buy the shuttle but might run into government opposition, Decker said.

Eastern’s shuttle has been consistently profitable, Decker said, which enhances its marketability.

“I don’t know that capital constraints would be a consideration,” he said.

But analysts also said the shuttle was not worth the $365 million in cash that Trump had offered.

“Probably between $310 million and $330 million would be a good price,” Marckesano said.

When Trump purchased the shuttle he seemed more interested in it as a way to advance his name than earn a huge profit on his investment. He said he would rename it the “Trump Shuttle” and would “run it like a jewel.”