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Shearson Advising Potential Bidder for Eastern

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From Associated Press

Investment firm Shearson Lehman Hutton Inc. said it is acting as financial adviser to a Chicago futures trader who may make a bid for strike-torn Eastern Airlines.

Joseph Ritchie, chairman of CRT Group, reportedly plans a bid for Eastern and is being advised in the matter by former defense secretary Frank Carlucci. Carlucci is a vice chairman of Carlyle Group, an investment company based in Washington, and sources said the federal bankruptcy court almost tapped him in mid-April as a special interim trustee to run the airline.

Shearson “is acting as financial adviser to Joseph Ritchie in connection with a potential bid for Eastern Airlines,” Shearson spokesman Michael O’Neill said Monday.

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O’Neill denied a report in Monday’s Wall Street Journal, however, that Shearson is providing financing to Ritchie for the bid.

Ritchie did not return calls to his Chicago office.

CRT is one of the most active commodity options and futures trading companies, with $250 million in capital, according to the Journal. The company itself is not participating in Ritchie’s potential bid, the newspaper said.

The Journal quoted an unidentified attorney for Ritchie as saying details of financing for the bid and the nature of the Eastern unions’ participation were still being worked out. It said Ritchie would have an as-yet undetermined portion of his own money invested in Eastern under the deal.

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Miami-based Eastern has been in Chapter 11 bankruptcy protection from creditors since March 9, five days after the start of a strike.

U.S. Bankruptcy Judge Burton R. Lifland has set Wednesday as a deadline for all interested bidders to submit their offers for Eastern or its Northeast shuttle service to the court, which must approve any sales.

Eastern management insists that the airline is not for sale and is proceeding with its recently announced plan to rebuild as a smaller carrier and raise $1.8 billion by selling aircraft and other assets.

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Meanwhile, the Federal Aviation Administration said Monday that it has sent inspectors to Eastern’s main base in Miami to see if there are any violations of maintenance record-keeping rules such as those that were found in New York last week.

The air carrier announced Thursday that it had temporarily surrendered its repair station certificate at New York’s John F. Kennedy Airport after the FAA determined that Eastern failed to follow its system for recording and inspecting maintenance performed.

The New York suspension was for actions that predated the start of the strike, said Jack Barker, public affairs officer at the FAA’s Atlanta office.

No maintenance work has been performed at Kennedy since the start of the strike, he said.

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