Florida May Tap Pension to Aid Eastern Buyout

Florida Gov. Bob Martinez is considering whether to use $50 million from the state employees’ pension fund as loan money to facilitate a buyout of bankrupt Eastern Airlines, a published report said Sunday.

Martinez is exploring the option as one way to preserve jobs in Florida, the Miami Herald reported. Eastern, which is based in Miami, traditionally has been one of south Florida’s largest private employers.

But the loan will be made only if the deal represents a sound investment for the state’s pension holders, the governor’s chief of operations, Brian Ballard, told the Herald.

Ballard met Friday in New York with representatives of the pilots union at Eastern, the newspaper said. Talks were expected to continue this week.

The Air Line Pilots Assn. has backed a buyout of Eastern as the best way to resolve the airline’s current crisis.

Eastern, formerly the nation’s seventh largest airline, was forced to suspend all but about 10% of its flights, lay off 9,500 workers and file for bankruptcy after its pilots and ground workers walked off the job March 4.

Two separate investor groups have submitted proposals to purchase Eastern, but both have been criticized by bankruptcy examiner David Shapiro for not committing sufficient resources to the plan.

One group is led by former Piedmont Airlines Chairman William Howard, while the other group is led by Chicago options trader Joseph Ritchie. The state plan under consideration is not linked to either bidder.

The pilots union first proposed the state loan, the Herald said.