Eastern Reportedly Agrees to Sell Prized S. American Routes

Eastern Airlines agreed over the weekend to sell its prized South American routes and other assets to American Airlines as part of a plan to restructure from a 9-month-old strike, it was reported today.

Eastern was scheduled to meet with its creditors committee in New York before releasing a statement, a company spokeswoman said.

Eastern spokeswoman Karen Ceremsak would not comment directly about the story in the Wall Street Journal, which said a tentative agreement in the monthslong negotiations had been reached over the weekend. The report said the transaction will total $450 million to $500 million.

One source said Eastern might also discuss a plan to raise money by selling five Airbus A-300 jets and selling six others under a lease-back arrangement. The Airbus A-300s are valued at $28 million each.

American Airlines spokesman Ed Stewart said the company had no comment.

Eastern, which entered Chapter 11 bankruptcy reorganization March 9, five days after being crippled by a strike of its three unions, had planned to sell its South American routes as part of plans to emerge as a smaller carrier. Negotiations with American, which has coveted the South American routes for expansion of its Miami regional operations, stalled in August.

Eastern initiated new talks about two months ago, amid concerns about cash shortfalls in Eastern’s rebuilding plan.

Eastern has delayed presenting a new reorganization plan to creditors while the negotiations have continued. Eastern hopes to emerge from Chapter 11 in early 1990.

The newspaper report today, citing unidentified sources, said American would get Eastern’s South American and Caribbean routes, plus gates and landing sites at various airports. American also would obtain some other assets of Eastern’s parent Texas Air Corp., including Continental Airlines’ Miami-London route, the report said.

The newspaper reported that the agreement came about after Continental agreed to settle a longstanding lawsuit against AMR Corp., American’s parent company. That suit sought as much as $1 billion in damages and alleged that American’s computer reservations system gave American an unfair advantage.

The sale of international routes must receive government approval.

Eastern, which has shed many of its assets--including its East Coast shuttle service--since the beginning of the strike, has resisted selling the lucrative Latin American routes, which includes service to the Caribbean.