Eastern Airlines is being sued for more than $5 million by a group of retired pilots and their survivors who charge the company's pension managers with making real estate investments that caused the fund a potential loss of hundreds of millions of dollars in assets.

At the same time the Labor Department has threatened to sue Eastern and the Air Lines Pilots Association for breach of fiduciary duties if the four responsible managers are not replaced. The Eastern-ALPA-Labor negotiations are likely to influence the outcome of the class action.

A class action was filed in U.S. District Court for Eastern New York in late June by Archie F. Saccio of East Patchogue, L.I. on behalf of about 400 retired pilots and an equal number of surviving beneficiaries. (A similar individual suit was initiated by pilot David R. Mudd in December of 1979.) The suit states that during the past 15 years the pilot's retirement fund yielded only 1 percent per year, compared with the 7 percent return earned by another company pension fund covering general employes.

The pilots fund would have several hundreds million more today than its current $315 million in assets if it had been invested like the general fund, the plaintiffs contend. As a result some pilots' lifetime pension benefits may be as much as $75,000 under the minimum agreed upon in collective bargaining agreements.

According to the complaint, more than $20 million of plan funds were spent on "unconventional" securities.

Eastern claimed the stock had doubled in value in less than three months and subsequently utilized the appreciation for its own good by reducing the amount Eastern had to pay out in minimum benefits. It claimed it had tripled by 1978 so its obligation was again reduced. Starting in November 1978 Eastern cut its contribution to Saccio's retirement by $200 a month.

Yet an appraisal presented at January 1980 hearing of the Mudd case questioned not only the alleged appreciation but the whole investment. The plan put up the money but got no equity in the property, a warehouse.

Another deal Saccio claims was undertaken without authority involved $4 million in plan funds to buy stock in Atlantic Land Co. in 1974. An Atlanta warehouse bought for the plan had problems. The roof fell in, a a major tenant went bankrupt and gross revenues on a property costing more than $1 million fell to about $5,000 a year, the complaint stated.

Conflicts of interest were also charged. Investments with Crow interests involved a son-in-law of Crow who had been a classmate of Charles Dyer, one of the pension managers, at Harvard Business School. The fund, managed by Dyer, also invested in other Crow warehouses in Dallas, Atlanta and Kansas City.

The pilots alleged the managers were eating up their earnings in costs and fees. A man named Rollert, whose former employer was involved in the Atlanta warehouse and Atlantic land matters, was hired by Dyer and Eastern President Frank Borman to manage $100 million in plan funds at $500,000 a year.

Saccio is asking the court either to make Eastern pay the fund an amount equal to the highest value they put on the stock either by developing it or selling it at auction. In addition Saccio has asked for $5 million in punitive damages.

The Labor Department wrote Borman and O'Donnell, president of ALPA, in June and told the retirement committee to remove Dyer and others voluntarily or it would go to court. Negotiations are still under way between the government and industry.