Bankruptcy trustee Martin R. Shugrue will meet with the U.S. attorney for the eastern district of New York today in an apparent last-minute effort to head off a possible grand jury indictment against Eastern Airlines on charges of falsifying aircraft maintenance records, sources said yesterday.
Sources in New York and Miami, Eastern's headquarters, said that Shugrue will meet with Andrew K. Maloney in New York to discuss the grand jury investigation into Eastern's maintenance operations at airports in New York, Atlanta and Miami. Maloney would not comment.
"Nothing is going to happen within the next week," said a source close to the grand jury, but there were indications that grand jury action might occur within the next few weeks.
The grand jury reportedly has been investigating charges that Eastern supervisors ordered mechanics to sign federally required records claiming that they had performed maintenance that was not actually done.
One of the charges known to have been investigated was an allegation by a former Eastern manager at New York's LaGuardia Airport that mechanics routinely falsified records to show they had tested for water accumulation in the fuel tanks of aircraft parked overnight when the tests were never made. Excessive water in the fuel tank could cause an engine to stall.
It was not clear whether any management officials still working for Eastern are under investigation by the grand jury. To date, no Eastern official has received a letter from Maloney's office saying he is a target of the grand jury investigation, according to company officials.
The investigation was triggered by the Federal Aviation Administration, which last summer fined Eastern $839,000 for maintenance violations primarily at John F. Kennedy International Airport in New York. Eastern subsequently surrendered its maintenance license at Kennedy, where it had a major maintenance facility.
The FAA charged Eastern with making fraudulent entries into records required by the government to ensure that aircraft are properly maintained. The charges came at a time when Eastern's unions were mounting a major safety campaign in an effort to discredit the company's management.
The FAA subsequently referred the case to Maloney's office for possible grand jury action. A spokesman for the FAA said the agency periodically refers cases to the Justice Department when its investigators see evidence of a possible criminal violation.
The investigation appears to involve events that took place before the March 4, 1989, strike against Eastern by the International Association of Machinists. Eastern was forced into a court-protected bankruptcy reorganization within days when union pilots and flight attendants honored the machinists' picket lines.
Shugrue, who took over the day-to-day operations of Eastern last month, made the appointment with Maloney several days ago, according to Eastern officials. "We're trying to tell our side of the story," said an Eastern source.
Eastern spokesman Robin Matell said the firm could not comment "because there is a grand jury investigation."
An attorney familiar with the Eastern situation said the company was concerned an indictment could jeopardize Eastern's efforts to reorganize under bankruptcy law. "They're very worried that this thing is going to threaten the reorganization," he said.
However, another source closely involved with Eastern's reorganization efforts discounted the potential impact of any indictments on Eastern's future, pointing out that the charges do not appear to involve current management or current practices.