Strapped Eastern to Cut Payments to Creditors : Airlines: The carrier cites higher-than-expected losses for the move. Prospects for emerging from bankruptcy by summer are also fading.

Pleading that it will lose more than twice as much money this year as it had estimated just two months ago, bankrupt Eastern Airlines told its creditors Tuesday that it will have to sharply reduce the amount it has agreed to pay them.

Presenting its lenders with yet another revision of the business plan it must follow to get out of bankruptcy, the airline said it is so strapped that it must slow its planned growth this summer. And it said it probably will not be able to emerge from bankruptcy this summer as it had hoped.

Eastern said the main reason for its new estimate of larger losses is that it is attracting business travelers at a slower rate than expected. And that, it said, is a result of “the negative and disruptive public perception surrounding Eastern’s reorganization process.”

In its most recent proposal, made Jan. 25 and accepted by the creditors committee Feb. 22, Eastern had presented a package that would have involved repayment of 50 cents on each dollar it owed, with 10 cents of the payment in cash. And that was a far cry from the 100 cents on the dollar that Eastern had vowed to pay on the $980 million that it owed when it filed for Chapter 11 bankruptcy on March 9, 1989.

At a meeting here Tuesday, Eastern President Phil Bakes told unsecured creditors that the company “is no longer able to go forward with the previously announced tentative arrangement that would have paid (the creditors) 50 cents on the dollar.” He did not say how much Eastern now believes it will be able to pay.

The unsecured creditors range from airline food caterers to engine manufacturers. Eastern’s debts to them are not guaranteed by any collateral.

In an interview after the meeting, Bakes said: “I was extremely strong on the point that Eastern will have a successful reorganization.” He said that he had told the creditors that Eastern was being hurt by its “environment.”

Earlier this year, he said, Eastern’s preferred shareholders called for the liquidation of the airline. Overnight, he said, bookings fell 50%. He added that, as a result of adverse publicity, the airline is losing an average of two or three business travelers per flight.

Bakes said the airline had more than $700 million of its own money in cash. But, he added, since it has been required to petition the bankruptcy judge each time it needs to use the money, there has been a false perception that it is running out of cash. The airline said it plans to ask the court soon for $80 million from its escrow account to support its operations through midyear.

The Miami-based airline told the creditors committee that because of a “revenue shortfall in the first quarter of 1990” it was “required to boost its 1990 loss estimate to $330 million, an increase of $185 million from its January estimate.”

Bakes said the creditors committee was “very attentive” during his meeting with them, but members of the committee could not be reached later for comment.

The airline also told its creditors that it is no longer forecasting a profit in 1991, contrary to what it had said earlier.

The airline said it would reduce its fleet to 148 from 160 by selling airliners. The airline has been operating about 800 daily flights, down from 1,100 before the bankruptcy and the strike of its machinists, pilots and flight attendants five days earlier. Only the machinists are still on strike.

It did not say Tuesday how many flights a day it would operate this summer, saying only that it would continue to grow but would have 12% fewer flights than planned earlier.

The airline also said it plans to cut health insurance benefits for some retirees, saving Eastern $33 million a year.

Raymond Neidl, an airline analyst with the investment firm of Dillon, Read & Co., said Eastern’s problem is that the low fares it is offering are increasing its loads but hurting its yields--the amount of money it makes per seat.

“They have the time to gradually increase yield to a viable level,” he said. “I think that all parties want to avoid liquidation.”