Eastern Air Lines attorneys plea bargained with federal prosecutors yesterday to try to work out an agreement under which the carrier would plead guilty to criminal charges for violating aircraft maintenance regulations.
Andrew J. Maloney, U.S. attorney for the Eastern District of New York, could not be reached for comment, but his office confirmed that a meeting was in progress late yesterday afternoon.
Eastern spokeswoman Karen Ceremsak also confirmed that Eastern representatives were meeting with Maloney but would not comment on the nature of those talks.
"We have been meeting with the U.S. attorney and cooperating with the investigation all along," she said. "There was a meeting today and there will probably be other meetings."
The task facing Eastern trustee Martin Shugrue, who was appointed to remove Frank Lorenzo from control of the airline, is to try to minimize damage that would result from any indictments, said one source.
The indictments are expected to cover activities that occurred approximately two years before Eastern filed for bankruptcy, and before Shugrue and his team took control of the carrier.
Eastern sought protection from its creditors under federal bankruptcy laws in March 1989 after a strike by the International Association of Machinists virtually shut down the airline.
Huge losses since that time have left the airline battered and struggling to regain the confidence of business travelers.
One possible approach Shugrue might take, according to a source familiar with the negotiations, would be to have the company plead guilty to the charges while at the same time denouncing the practices by prior management that led to them.
A federal grand jury in Brooklyn has been investigating maintenance practices at the airline's facilities at John F. Kennedy and LaGuardia airports in New York, including charges that Eastern supervisors ordered mechanics to falsify records to indicate that maintenance had been performed when it had not.
Last summer, the Federal Aviation Administration fined Eastern $839,000 for maintenance violations, primarily at Kennedy, resulting in the airline surrendering its maintenance license there.
The FAA, which charged Eastern with fraudulent record keeping, subsequently referred the matter to Maloney's office for possible grand jury action.