Eastern Awarded $135-Million Cash Infusion : Airlines: The bankruptcy judge’s ruling followed testimony that the ailing carrier’s chances for survival were hurt by adverse publicity each time it sought funds in court.

A federal bankruptcy judge, giving troubled Eastern Airlines breathing room to survive at least into next spring, granted the carrier a $135-million cash infusion Tuesday that will save it from making repeated requests for operating funds.

The decision by Judge Burton R. Lifland followed testimony by Martin R. Shugrue Jr., the airline’s bankruptcy trustee, that requiring Eastern to come to court every time it needed money dramatically hurt business and the carrier’s chances for survival.

“This is a major victory for Eastern Airlines and a major victory for its 18,000 employees and a major victory for the American traveling public,” Shugrue said after an hourlong hearing. “Passengers can book with confidence.”

In his testimony, Shugrue had complained that when hearings were held earlier this month on the airline’s request to draw $30 million from an escrow account, the adverse publicity nearly killed advanced bookings, costing Eastern $36 million.

At that time and again on Tuesday, Eastern’s unsecured creditors argued that the airline should be liquidated.

“Eastern is not reorganizable,” said the attorney for the creditors committee, Joel B. Zweibel. “It is not a viable, stand-alone airline.” Zweibel said the carrier was still losing $2 million daily.

Judge Lifland said “tension exists” between the two parties and agreed that the airline’s chances to remain viable were better served if it did not have to come back to court every time it needed money.

He also criticized the creditors for contributing to the bad publicity by seeking liquidation and by leaking information to the media.

In his ruling, Lifland ordered that $15 million of the released funds be set aside for Eastern to make deposits with credit card companies that are breathing down its neck. Shugrue said American Express had already required Eastern to make a $10-million deposit as “cash-up-front money” to cover customer ticket purchases. Other credit card companies are about to do the same, Shugrue said.

The $135 million for day-to-day operating expenses includes $15 million which the judge previously had said would be paid out to the airline on Dec. 3. Two weeks ago, Lifland allowed Eastern to take $30 million from its escrow account, which holds funds it has realized from the sale of assets since declaring Chapter 11 bankruptcy in March, 1989.

Even with the judge’s vote of confidence in Shugrue’s management, observers’ assessments of Eastern’s chances for survival were mixed.

“Instead of going back and asking the judge for money all the time, they have to generate cash from their business,” said Edmund Greenslet, a Florida-based analyst. “I think Eastern can reach the point where it can generate cash in a reasonable period of time.”

But Kevin Murphy, an airline analyst with Morgan Stanley & Co., an investment house, said efforts to rescue the Miami-based carrier were wasted.

“Put Eastern to rest,” he said. “Competition should not be held back. There is too much capacity,” he said, and Eastern’s competitors could readily absorb its passengers if the carrier is allowed to fold.