Eastern Air Lines, unable to negotiate new labor agreements with its three major unions by a Thursday midnight deadline, entered technical default with some of its lenders yesterday but continued both to negotiate and to fly a full schedule.
Eastern Vice President Richard McGraw said yesterday that the airline had reached agreements in principle with both the Air Line Pilots Association (ALPA), representing the pilots, and the Transport Workers Union (TWU), representing its flight attendants.
However, McGraw said, "there is no basis for an agreement in principle" with the International Association of Machinists and Aerospace Workers (IAM), which represents Eastern's mechanics and ramp workers. McGraw said he expected negotiations with the IAM to continue through the weekend.
Charles E. Bryan, IAM general district chairman, a member of Eastern's board of directors and a longtime critic of Eastern Chairman Frank Borman, said the airline will have to make "a significant change" in business philosophy before it can reach agreement with the IAM.
Eastern's employes forfeited 18 to 22 percent of their salaries during 1984 and the company maintains it needs similar concessions again to return the airline to profitability.
Bryan's view is that the savings can be found through union-suggested productivity improvements, but that salary levels for his members must be maintained. Bryan has said on several occasions that Eastern's management is top-heavy and that significant savings would be made from cuts at that level.
None of the 60 or so financial institutions to which Eastern owes about $2.5 billion has pulled the plug or seems inclined to do so, according to both McGraw and industry analysts.
McGraw said that Eastern has missed no payments on its loans. The technical default comes from the fact that Eastern's lenders had granted waivers to terms of some loans contingent upon labor costs. The labor costs were supposed to be guaranteed with contractual agreements effective Thursday midnight. McGraw said Eastern is seeking a two-month extension from its lenders.
"There is no question those in major lending positions can demand full repayment, but they know that can't be done without forcing the company into some sort of liquidation," one industry analyst said. "If the lenders are convinced some progress is being made, they will give Eastern some time to adjust."
Eastern reported a $69 million operating profit for the fourth quarter, the highest quarterly profit in its history; because of heavy debt service, however, net profit was only $10.7 million. For the year, Eastern had an operating profit of $189.6 million compared with a loss of $100.1 million a year earlier. However, again because of heavy debt service, the 1984 operating profit became a net loss of $37.9 million. Debt service will decline in 1985, McGraw said, after peaking in 1984 at $227.6 million.