Cash-Squeezed Eastern to Lease 14 Jets to Pan Am

In a move to bring in badly needed cash, struggling Eastern Airlines said Thursday that it would lease 14 Boeing 727-200 planes to Pan American World Airways. Eastern, which has been strikebound since March 4, said it would receive a total of $96.6 million over five years from the deal.

The agreement, however, hinges on bankruptcy court approval. Eastern filed for bankruptcy court protection under Chapter 11 of the U.S. Bankruptcy Code on March 9.

A Pan Am spokesman said the planes would be used to increase seats and add flights on domestic routes. “We have been capacity short,” said Jeffrey Kriendler, a Pan Am spokesman. He said Pan Am, for example, would like to increase flights between New York and Houston and New York and Dallas from one to three a day. He said flights to South Florida would also be increased.

Under the agreement--arranged by Eastern to help return the carrier to the air and profitability--the 149-passenger airplanes would be leased for $115,000 a month, the airline said. Eastern said earlier this week that it planned to dispose of assets valued at $1.8 billion, including about 40% of its aircraft over the next eight months. Eastern also said it planned to pay down $900 million in debt to save on interest and depreciation costs.

The airline said the planes it is leasing to Pan Am exceed its needs as a “smaller, economically viable airline serving fewer cities as it gradually rebuilds service over the next several months.”