Eastern to Pay Creditors Half of What’s Owed : Airlines: The deal with unsecured creditors moves the airline a step closer to emerging from bankruptcy.

After nearly a year of contentious negotiations, Eastern Airlines on Thursday reached agreement in principle with its unsecured creditors on a financial plan that would give the creditors about half of what they are owed.

The accord moves the ailing Miami-based carrier a major step closer to emerging from bankruptcy. However, major obstacles remain that are likely to slow Eastern, which filed for protection from creditors last March 9, in its effort to escape from Chapter 11 bankruptcy proceedings.

Early in the proceedings, Frank Lorenzo, chairman of Eastern and its parent, Texas Air Corp., said the creditors would be paid in full. But a person close to the situation said economic conditions have changed since that pledge was made. The airline business in general is off, and the price of jet fuel, a major expense for airlines, has risen dramatically.

A statement issued by Eastern said both Texas Air and Continental Airlines, another Texas Air subsidiary, would “assist in the recapitalization of Eastern and provide a fresh start for the airline.” The statement added that the agreement “would enable Eastern to emerge from Chapter 11 with substantial resources and a significant debt reduction.”

The agreement appears to represent a major change in Lorenzo’s strategy. In the past, his approach had been to keep claims against Eastern separate from Texas Air’s finances.

“They have tried to avoid doing this,” said Raymond Neidl, airline analyst with Dillon, Read & Co., a New York-based brokerage. “You don’t want to involve other subsidiaries. But evidently, through the negotiations with the creditors, Texas Air was forced to walk that extra mile.”

The 15-member committee of creditors said the process now would take several months, and Eastern’s statement said it expects to emerge from bankruptcy by midyear.

The unsecured creditors range from food caterers and fuel suppliers to engine manufacturers and individuals holding unused tickets. In a previous proposal given to the creditors last month, Eastern said it would pay all ticket holders in full. But that issue was not addressed in Thursday’s announcement.

The unsecured creditors would share proportionately a total of $490 million in payments--$300 million in cash and $190 million in notes--toward the approximately $1 billion that Eastern owes them. The cash would come from Eastern, as would half of the $190 million in notes; Continental would issue the other half.

Both sides said the agreement is subject to certain conditions. For one thing, the $471-million sale of Eastern’s South American routes to American Airlines, now awaiting regulatory approval, must be consummated. Also, Eastern must reach agreement with its pilots and flight attendants unions, which began a sympathy strike when Eastern’s machinists struck the airline last March 4.

The two unions officially ended their walkouts Nov. 22 but have not reached agreement with the airline on new labor contracts. It is understood that few, if any, of the unionized pilots and flight attendants have actually returned to work. The machinists remain on strike.