Ueberroth Group Agrees to Buy Eastern

NEW YORK--A group led by former baseball commissioner Peter V. Ueberroth agreed to buy Eastern Airlines for about $463.9 million in a deal that would give the strikecrippled carrier's employees a major share of the company, the parties announced yesterday.

The deal, subject to approval by Eastern creditors and the U.S. Bankruptcy Court, followed lengthy negotiations with Eastern's parent Texas Air Corp.

Texas Air Chair Frank Lorenzo told a news conference the agreement includes about $200 million in cash and the rest in securities.

"Under this agreement Eastern can be back flying in very short order," he said.

Miami-based Eastern has been virtually paralyzed since March 4 by a Machinists union strike that has drawn the support of pilots and flight attendants. Eastern filed for reorganization and protection from creditors in U.S. bankruptcy court in New York on March 9 as its cash dried up.

Lorenzo said that if the unions agreed to the deal the nation's seventh-largest airline could resume flying within 24 hours. He also said the airline intended to file a reorganization plan that would pay creditors 100 percent.

Ueberroth, who flew to New York late Tuesday night from his California home, began personal negotiations with Lorenzo early Wednesday morning and continued them until about 8 p.m., resuming talks early yesterday.

Ueberroth's group made a $464 million offer for Eastern last week and then withdrew the bid after being told by Texas Air that it had been topped by another suitor, identified by sources close to the situation as billionaire hotel executive Jay A. Pritzker.

Under the offer accepted by Texas Air, Ueberroth and Thomas Talbot, a former airline executive from California, would own 30 percent of the airline. Eastern's unions would get another 30 percent of the company in exchange for wage and work-rule concessions. The remaining 40 percent would be held by new investors, including Drexel Burnham Lambert Inc. and Ardshiel Inc., a smaller New York firm.

The group also will receive a minority interest in Texas Air's computer reservations system. The reservation network, System One, is comprised of the former systems of Eastern and Continental Airlines, also owned by Texas Air.

Many union leaders and rank-and-file members have said they would accept wage and benefit concessions to help resurrect Eastern if they were given independence from Texas Air, which acquired the 60-year-old carrier in early 1986 for about $600 million.

Lorenzo has been vilified by Eastern workers as a union-buster who was stripping the airline of its assets and funneling them to Continental, which is substantially non-union.

"We're ready to go back to work under someone who is not interested in tearing down the airline," pilot Ron Fletcher said at a rally of more than 500 people Wednesday in front of Eastern's corporate offices in Miami.

"Money is not really the issue. What we want to know is that Eastern has a future," Fletcher said.

In a related development Wednesday, the U.S. bankruptcy court in New York appointed Washington attorney David Shapiro as examiner in Eastern's Chapter 11 reorganization case.

Shapiro, 60, a senior partner in the firm Dickstein, Shapiro & Morin, was recommended by U.S. Trustee Harry Jones and appointed by U.S. Bankruptcy Judge Burton Lifland.