No ‘Credible’ Eastern Buyers, Lorenzo Says : He Tells His Side of Why Sale to Ueberroth Failed

Frank Lorenzo went on the offensive Wednesday, declaring that there are no “credible” buyers for bankrupt Eastern Airlines and detailing the reasons that Peter V. Ueberroth’s plan to buy the strikebound carrier fell through.

Lorenzo, the chairman of Eastern and of the airline’s parent, Texas Air Corp., reiterated that Eastern is no longer for sale and insisted that it can succeed as a downsized carrier.

To that end, Lorenzo said, assets would be sold and bids have already been made for a variety of assets, including Eastern’s entire airplane fleet. But he wouldn’t say which assets would be sold.

Lorenzo denied assertions made earlier this week in bankruptcy court that a mysterious fourth bidder for Eastern had materialized. He also said no talks are under way concerning the sale of the airline.

Under Pressure

However, Texas Air remains under pressure to sell Eastern. Bankruptcy Judge Burton R. Lifland has previously indicated that he thinks that is the best way to get Eastern’s planes back in the air.

Well-placed union sources said formal bids from TWA Chairman Carl C. Icahn and a separate, unidentified group can be expected Monday in bankruptcy court at a hearing before Lifland on whether the airline should be auctioned.

Lorenzo, who has taken a public beating at the hands of the unions that bitterly oppose him and whose striking members have virtually grounded Eastern since March 4, talked about Eastern’s predicament with a handful of reporters at Texas Air headquarters here. He also pressed his case in a guest editorial for the Miami Herald in Eastern’s hometown.

In addition, he said he had made telephone calls Wednesday to some of Eastern’s striking pilots and had prepared a video for members of the striking Air Line Pilots Assn.

Lorenzo explained at some length his opposition to the naming of a trustee to manage Eastern’s affairs while it is being reorganized under auspices of federal bankruptcy court. The naming of such a trustee was demanded by the carrier’s unions as part of their partnership with Ueberroth, the former baseball commissioner, who wanted to buy Eastern for $464 million.

Talks Fell Apart

When the two sides failed to agree that a trustee should be named, the talks fell apart. Lorenzo said Ueberroth phoned him as recently as Tuesday and “made it very plain that he is out of the deal.”

Lorenzo’s position was that under a trustee he would lose control of the company before any money changed hands. Before such a deal was closed, he said, the buyer could even claim that the company was worth less than it was when the deal was struck.

“You don’t move out of a house until you get paid for it,” he said.

To strike a compromise, Lorenzo said he even offered to make Ueberroth co-chairman of Eastern and give his people three seats on Eastern’s board with the opportunity to take part in all major decisions while the airline remained in bankruptcy.

Lorenzo also revealed that he had been talking to Ueberroth for two years about coming to work for Eastern when his baseball job ended.

Appearing more relaxed and less gaunt than at recent public appearances, Lorenzo indicated that there had been others interested in buying Eastern in addition to the Ueberroth group, Icahn and Chicago hotelier Jay Pritzker. But these people don’t recognize the value of the assets of the carrier, he declared.

“A lot of people want to get Eastern airlines for nothing,” he said. “They want to pay beads, jelly beans or whatever. They want to steal the company.”

Lorenzo said the sale of Eastern’s northeastern shuttle was an example of how Eastern would be raising cash to remain liquid. He said that if the pending sale to New York real estate magnate Donald Trump had taken place earlier, Eastern would not have had to file for bankruptcy.