Sale of Eastern’s Routes to American Approved

The government on Thursday approved the sale of most Eastern Airlines foreign routes to American Airlines and awarded a new Texas-Tokyo route to Continental Airlines.

President Bush has the authority to reject either deal if he believes that it will harm U.S. national security or foreign policy interests.

The Transportation Department’s decision, made tentatively 10 days ago, includes the transfer to American of Eastern’s Central and South American routes as well as its Miami-Madrid flights and a Miami-London route operated by Continental, Eastern’s sister carrier in the Texas Air group.

The department refused to allow the transfer of Eastern’s Florida-Toronto route as part of the deal, saying it would examine the proposal further and consider selecting a carrier other than American to operate the service. Three other carriers have indicated an interest, officials said.

A bankruptcy judge last week turned Eastern over to a trustee, removing it from the control of Texas Air Corp. owner Frank Lorenzo.

Eastern’s previous management had said sale of the routes to American, approved by the bankruptcy court, was key to Eastern’s financial plans. American had agreed to pay $349 million, but that sum included the Toronto route.

The awarding of a Houston-Honolulu-Tokyo route to Continental ended competition among six carriers for a service formerly belonging to Federal Express.

The cargo service, lost by Federal Express when it took over Flying Tiger Line, which already had U.S.-Japan cargo authority, has been expanded to include both passenger and cargo service.

Continental and three other carriers--America West, Aloha and Delta--proposed a Honolulu-Tokyo route to replace the Federal Express service. Hawaiian Airlines wanted to run the service between Honolulu and Nagoya and American proposed a service between San Jose and Tokyo.