Any Eastern Trustee Would Operate Airline, Judge Says

A federal bankruptcy judge said Monday that any trustee he might appoint to take over the affairs of Eastern Airlines would be “a qualified operating trustee” whose mission would be to run, not liquidate, the troubled carrier.

But Judge Burton R. Lifland asserted that he had not made any decision on whether such a trustee would be appointed. “I did not say anything about granting” the petition of the Eastern creditors for the appointment of such a watchdog, Lifland said. A trustee would wrest control of Eastern from its parent, Texas Air Corp.

During the second day of hearings on whether a trustee should be appointed, the lawyer representing Eastern, Bruce Zirinsky, reiterated his contention that such an appointment would almost certainly lead to a dissolution of Eastern.

Eastern, which owed its creditors about $1 billion, at first vowed that it would pay 100 cents on the dollar. But it has been doing so poorly that it has constantly lowered its offer. As the offers declined, the creditors’ earlier support waned.

One of the witnesses at Monday’s hearing, Alan S. Boyd, chairman of the Eastern creditors committee and chairman of Airbus Industrie of America, described how the creditors slowly lost confidence in the airline’s management since the carrier filed for Chapter 11 bankruptcy protection on March 9, 1989. (Airbus Industrie is owed $100 million by Eastern, making it the Miami-based airline’s biggest creditor.)