A federal bankruptcy judge Wednesday ordered Eastern Airlines’ striking machinists to stop harassing customers and employees who cross picket lines at New York’s LaGuardia Airport.
The airline accused the strikers of spitting at employees and passengers, of throwing nails in front of cars in attempts to puncture tires, of damaging cars in a variety of ways and of making threats and assaults.
Eastern lawyers appeared Wednesday morning before Judge Burton R. Lifland with videotapes that they said supported their claims. The judge, who issued a temporary restraining order, set next Wednesday for a hearing on Eastern’s request for a preliminary injunction.
Lifland ordered the leadership of the International Assn. of Machinists and Aerospace Workers to notify rank and file members that they must “refrain from engaging in any violence, threats, mass picketing, assaults, nuisance, trespass, verbal abuse, disorderly conduct, defamation, disturbing the peace and/or other tortious acts directed at Eastern, its officers, agents, representatives, employees, customers or others having business dealings with Eastern.”
In a letter to all members, the IAM said they must “strictly comply with the requirements of the order. A violation of the restraining order will have far-reaching consequences.”
The court action came a few hours before a U.S. trustee appointed a 15-member committee composed of creditors, two unions and one individual to help oversee the airline’s reorganization under provisions of Chapter 11 of the U.S. Bankruptcy Code. Eastern filed March 9 for protection from creditors while it reorganizes.
About 400 creditors appeared in a hotel ballroom for the meeting to hear from Eastern’s lawyers what the airline’s present financial condition is and to get an idea of how its reorganization will take place.
Harold Jones, U.S. trustee for the Judicial Districts of New York, Connecticut and Vermont, had predicted to reporters that the session, which began about 2 p.m., would last until late in the evening. However, only four questions were asked and the session was completed in about 15 minutes.
Jones said the committee “will act as the fiduciary body for all the unsecured creditors and will also negotiate for all creditors.” He said he sought to include the airline’s largest creditors as well as a variety of others.
Duties of the creditors committee include coming up with its own plan of reorganization for Eastern and negotiating with the airline on one that it will propose. The bankruptcy judge will administer the steps taken toward reorganization and must approve any sale of assets “outside of the ordinary.” Sale of a landing slot, a gate or an airplane would not require his approval.
Besides the unsecured creditors, which range from ticket holders and food vendors to aircraft engine manufacturers, there is a large group of creditors whose loans are secured by collateral. Of Eastern’s $1.2 billion in debt, 25% is held by secured creditors.
Harvey Miller, the airline’s bankruptcy lawyer, told the assembled creditors that Eastern has $1 billion in assets “over and above” its $4.5 billion in liabilities. The airline had said earlier that it filed under Chapter 11 because the strike was rapidly draining it of cash.
Eastern is flying 9% to 10% of the 1,040 daily trips it flew before the machinists’ strike began March 4, Miller said. Most of the unionized pilots and flight attendants have observed the machinists’ picket lines.
The committee of creditors includes Airbus Industrie, which is owed $95.9 million by Eastern; General Electric, $75.5 million; Boeing, $54 million; United States Trust of New York, $58.7 million; UT Credit Corp., $22.3 million; IBJ Schroder Bank & Trust, $19.6 million; American National Bank & Trust of Chicago, $12.8 million; Rolls-Royce Credit Corp., $5.9 million; Marriott Corp., $1.1 million, and AT&T; Communications, $800,000.
The other five members are Citicorp and Rohr Aero Services, which are creditors but were not on the list of Eastern’s 20 largest creditors that was filed with the bankruptcy statement; the International Assn. of Machinists; the Air Line Pilots Assn., and Mary Grace Shore, an Eastern ticket agent in Richmond, Va., who represents the company’s non-striking employees.