Eastern Air Lines' board of directors yesterday adopted a series of so-called "poison pill" measures to discourage an unfriendly takeover attempt by its unions or anybody else.
Frank Borman, Eastern chairman, said in an interview: "When Eastern is restructured -- and I'm confident it will be -- it could be a relatively easy and attractive takeover target." He said the measures are designed to reduce that possibility.
Eastern is in the throes of a major financial and labor struggle and is seeking significant cost concessions from its three unions. Eastern's lenders, worried about the $2.5 billion owed them by the airline, have given the carrier until Feb. 28 to have new cost-saving contracts signed and in place.
Eastern has imposed a new salary schedule and work rules on its flight attendants, represented by the Transport Workers Union. A federal mediator has declared an impasse in the airline's talks with its pilots, who are represented by the Air Line Pilots Association.
After the 30-day cooling-off period expires at midnight Feb. 25, the pilots can strike or Eastern can impose new work rules and salary schedules.
Eastern has yet to begin renegotiating with its mechanics and ramp workers, who are represented by the International Association of Machinists and Aerospace Workers.
Although no new contracts are in place, Borman said he is confident they will be. "I believe in the inevitable triumph of reason," he said.
Charles Bryan, the leader of Eastern's mechanics and a member of Eastern's board, has been trying to organize a takeover attempt by Eastern's unions. Bryan, who is usually very accessible, declined to return phone calls "on advice of counsel," his secretary said.
A union takeover proposal is expected to be filed Monday at the Securities and Exchange Commission, but rumors of the union move have circulated all week without any action. It is unclear how many pilots and flight attendants support an employe-takeover effort. Eastern's 40,000 employes already own about 20 percent of the company's stock, which they have received over the years in exchange for pay raises.
Borman said the poison-pill measures were adopted on the recommendation of financial consultants and are similar to those used by USAir and "80 other major companies" since December. "There have been several large blocks of Eastern stock traded recently. . . but nobody has called us," he said.
The "poison-pill" measures are designed to make it prohibitively expensive for an investor or group to acquire the company without first negotiating with Eastern's board of directors.
Under the board-approved measures, Eastern's stockholders will receive the right under specific circumstances to purchase stock at cut-rate prices in any new company formed in a takeover. That would significantly dilute the value of Eastern to a takeover group.