Eastern Reports $185.2-Million Loss in Quarter

MIAMI — Eastern Airlines posted a third-quarter net loss of $185.2 million on Wednesday, after reportedly advising creditors’ attorneys of a cash shortfall looming in its rebuilding plan.

The loss, announced by Eastern’s parent, Texas Air Corp., was on revenue of $305.7 million before a $12.4-million charge for dividends payable to its preferred shareholders.

In the third quarter of 1988, Eastern had a net loss of $112.9 million on revenue of $912.7 million, before a $12.3-million charge for preferred dividends.

“Eastern continued to successfully rebuild its operations during the third quarter at a rate well beyond expectations,” Eastern President Phil Bakes said in a statement. “While losses were substantial, they were well within projections and reflect the costs of building back our operations.”

Meanwhile, Texas Air Corp. on Wednesday reported a third-quarter net loss of $158 million, compared to a net loss of $114.1 million a year ago. Revenue plunged 47% to $1.7 billion.

In a message to working employees Wednesday evening, Eastern officials emphasized that the third quarter saw major growth in Eastern’s overall operations and that the airline was defying the odds by battling back from the 8-month-old strike.

But the message added, “We have a very long way to go.”

Eastern must build up adequate financial resources to come out of Chapter 11 bankruptcy protection and begin turning a profit even as economic indicators point to a downturn in the airline industry, the message to employees said. Eastern officials have said the airline will emerge from bankruptcy early next year at nearly 90% of its pre-strike size.

Published reports Wednesday said Eastern told its creditors’ attorneys that it has a projected cash shortfall of $200 million.

A creditors’ committee meeting scheduled for Tuesday was canceled and Eastern has asked for a 60-day extension of the period in which it has exclusive rights to submit a reorganization plan. Eastern also has requested a 30-day extension of its deadline for filing a disclosure statement that would document how the carrier intends to pay back its creditors.

“Their plan just isn’t working,” said Tom Anzalone, spokesman for the striking Eastern pilots. “Everything keeps getting pushed further and further back. The creditors’ committee is going to have to eventually take a stand.”

Anzalone said Eastern is not only running short of cash, it’s also short on serviceable planes and personnel and may have to start cutting back its schedule.

Eastern is trying to rebuild without its unions after being crippled by the strike that started March 4. The Miami-based carrier filed for Chapter 11 protection from creditors.

It is back to 775 daily flights, compared to nearly 1,100 before the strike began.

Eastern spokesman Robin Matell declined comment about the reports of a cash shortfall, but he said Eastern was making good progress on a reorganization plan acceptable to its creditors.

“We’re substantially on target and we’re confident about the projections,” Matell said, adding that Eastern has about $600 million in proceeds from asset sales in the works.