Report Didn’t Find Texas Air Liable, Examiner Maintains

Texas Air Corp.’s agreement to pay its Eastern Airlines subsidiary about $280 million was not an admission that it bought assets from the airline at unfairly low prices, Eastern’s court-appointed bankruptcy examiner told congressional leaders Monday.

David I. Shapiro said his report investigating dealings between Texas Air and Eastern, which concluded that Eastern was underpaid by hundreds of millions of dollars, was misinterpreted by the news media as a finding that Texas Air was liable for the money.

“I did not find that Texas Air had improperly diverted assets from Eastern,” Shapiro wrote in a letter to House Speaker Thomas S. Foley and House Minority Leader Robert H. Michel. “Instead, I set forth the grounds on which such a claim could be asserted.”

“The settlement is not an admission of liability by Texas Air,” the letter read. “Rather, it is an agreement between Texas Air and the examiner as to what is needed to assure the economic viability of Eastern Airlines.”

Shapiro declined comment on the matter Monday. A copy of the letter, sent Monday, was obtained by the Associated Press.

A Texas Air spokesman called the letter “a very significant clarification,” while a union attorney described it as “comical.”

Shapiro’s report, filed last Thursday in federal bankruptcy court, concluded that Texas Air purchased Eastern and some of its assets at unfairly low prices and owed the carrier $285 million to $403 million.

“There is sufficient evidence to warrant the bringing of charges that (12) transactions provided Eastern with less than fair consideration or reasonably equivalent value,” the report said. “ The court could therefore appropriately authorize litigation of these 12 claims.”

Texas Air agreed at the time to pay Eastern $280 million in cash and assets, but objected to Shapiro’s findings on grounds that it had engaged in no wrongdoing. The company said its payment was merely to help bolster Miami-based Eastern.