Bakes Resigns as President, Chief of Eastern : Airlines: The move comes in the wake of the appointment of a trustee. The action wasn't part of a deal with creditors, the firm says.

From Associated Press

Phil Bakes resigned Friday as president and chief executive of Eastern Airlines, as a court-appointed trustee replaced parent Texas Air Corp. as head of the airline.

Bakes, a long-time cohort of Texas Air Chairman Frank Lorenzo, urged Eastern employees to support trustee Martin R. Shugrue Jr., who was appointed Wednesday by U.S. Bankruptcy Judge Burton R. Lifland.

The judge appointed Shugrue over the opposition of Eastern and Texas Air after the airline's unsecured creditors argued that present management appeared unable to halt the company's financial deterioration.

"I know you will give Marty the complete support and commitment you afforded me. I have been privileged and inspired to be associated with you," said Bakes in a statement issued to Eastern's employees.

"The last 12 months, in particular, have been the most satisfying of my life because of your accomplishments. I am confident you will continue to succeed," Bakes said.

Eastern has lost $1.2 billion since machinists, pilots and flight attendants walked off their jobs in March, 1989, prompting the airline to seek protection from its creditors under Chapter 11 of the U.S. Bankruptcy Code.

Lorenzo has denied reports that he had offered Bakes' resignation to creditors this past week in exchange for withdrawing their request for a trustee.

Bakes' announcement came hours after Shugrue met Friday morning with Eastern's officers. Company spokeswoman Karen Ceremsak said Bakes' resignation was freely offered and was not part of a deal with creditors.

Ceremsak said no other resignations were expected.

Bakes joined Texas Air in 1980 and became president of Eastern's sister carrier, non-union Continental Airlines, before leaving to run Eastern in October, 1986.

Under Bakes, Eastern suffered continued financial losses--including $852.3 million in 1989--and labor turmoil culminating in the strike and bankruptcy filing.

During bankruptcy court hearings this past week, Bakes warned that the appointment of a trustee could make it tougher for Eastern to improve its business by further shaking the confidence of consumers and travel agents. He also warned that such a move could spark departures by members of Eastern management, causing additional problems.

Shugrue also has had close ties to Texas Air, serving as president of Continental until Lorenzo pressured him to resign in February, 1989.

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