Northwest Airlines Could Buy Eastern

Northwest Airlines is considering the purchase of troubled Eastern Airlines and is slated to meet with Eastern’s unions to determine if the carrier’s labor problems can be solved, it was reported today.

The Washington Post, citing sources, reported that representatives of the International Assn. of Machinists met Monday to discuss the problems of integrating Eastern employees into Northwest as a prelude to talks later this week between Northwest Chairman Alfred A. Checchi and John Peterpaul, vice president of the IAM.

The newspaper quoted Northwest spokesman Doug Miller as saying the Minnesota-based airline is examining all its options for growth and expansion.

“We are not in a position to discuss the options we are reviewing, nor should anyone conclude that such an examination will lead to a transaction,” he said.

The newspaper said Northwest approached Eastern trustee Martin Shugrue about buying some of the Miami-based carrier’s airport gates in Atlanta and some of its maintenance facilities but was rebuffed.

Shugrue, who was appointed by the bankruptcy court last April to replace Frank Lorenzo and his management team, “made it very clear that parts of the airline are not for sale. It is the whole airline,” the newspaper said.

Creditors apparently feel that Eastern cannot survive on its own and that a sale is the only way they can recoup their money. “I think the creditors’ group hopes it can be sold,” a source told the newspaper.

Eastern filed for Chapter 11 bankruptcy protection in March, 1989, just days after the IAM struck in a bitter contract dispute and was joined on the picket line by pilots and flight attendants.

The airline was almost shut down but managed, with the help of attendants and pilots who crossed the picket line and newly trained pilots, to return to the air on an abbreviated schedule. The carrier is still believed to be losing $1 million per day, the newspaper said.

Shugrue took over with a promise to seek labor peace, but talks with the Air Line Pilots Assn. broke down last week when the union rejected his offer to recall 650 pilots and restore their seniority over three years. Hard-line pilots want a more complete restoration of their seniority over strikebreakers.