NEW YORK, NOV. 15 -- Eastern Air Lines Inc. trustee Martin R. Shugrue Jr. has a second lease on life today.
With $15 million in hand, he promised the public that "Eastern will be around well into 1991 -- and if my judgment is right, we'll be around after that."
Shugrue's hope flows out of a federal bankruptcy judge's decision late Wednesday night to give Eastern enough money to keep it flying through the Thanksgiving holiday. But the reprieve appears to be less a judgment that Eastern can be saved than a determination that it's simply too early to pull the plug on the airline.
The 8 1/2-hour bankruptcy court hearing essentially boiled down to a question of whether Shugrue's business judgment could be trusted.
Eastern's creditors, a contingent of such major companies as Boeing Co. and American Telephone & Telegraph Co., argued that it could not -- the best solution would simply be to shut Eastern down, they said.
The creditors argued that Shugrue's record of missing projections and underestimating operating costs, to say nothing of the recession engulfing the airline industry, undermined the credibility of his plans to stop the financial hemorrhaging at Eastern.
After several hours of testimony, including that of Shugrue -- who brought the same dramatics to the witness stand that he brings to Eastern's television commercials -- U.S. Bankruptcy Judge Burton R. Lifland decided to give the Miami-based carrier another chance. As the purveyor of funds since Eastern filed for bankruptcy reorganization in March 1989, Lifland agreed to give the carrier a cash infusion from an escrow account containing money from the sale of Eastern assets.
Shugrue had argued that his efforts, including a plan to win back business travelers, are beginning to bear fruit. The airline would break even or turn a profit in 1991, he said. The balance was tipped in Shugrue's favor when Harry A. Kimbriel, an airline adviser to Lifland's special adviser David I. Shapiro, endorsed some of Shugrue's points.
Lifland's ruling wasn't a ringing endorsement of the prospects for Eastern: He granted Shugrue only half the money he asked for and said he viewed the request as more of a plea to let Eastern "tread water."
But it was enough for Shugrue.
"He has set in motion the process for funding Eastern between now and February 1991, when we expect to break even," Shugrue said at a news conference today. If Shugrue can prove his ability to meet his own revenue projects, the airline will get more money Dec. 3.
Can Eastern make it as a stand-alone airline?
The creditors said this week they no longer believe it can. And not even Shugrue is willing to promise such an outcome.
"I don't know the ultimate answer to that question," said Shugrue, adding that he is not ruling out other prospects, such as a merger. "I could also make the case for an independent Eastern," he said.
Shugrue said that the airline appeared to suffer no serious losses Wednesday from the adverse publicity the carrier received this week.
Travelers wondering whether to book tickets for holiday flights should not hesitate, he said. There is a fund to reimburse ticket holders if the airline should shut down, but he said, "We're going to be here."