Texas Air Corp., owner of New York Air and Continental Airlines, has offered to buy Eastern Airlines, stepping into the middle of Eastern's fragile negotiations with its pilots, who have set a strike deadline for Wednesday.
The purchase offer from Frank Lorenzo, Texas Air's president, increased the heat on contract negotiations between Eastern and representatives of the 4,300-member Air Line Pilots Association.
In separate meetings yesterday, Eastern's directors considered Lorenzo's offer while negotiators for the airline and its pilots continued to struggle over labor contract terms, sources said.
Eastern Chairman Frank Borman has told the pilots that a permanent 20 percent pay cut and new work rules are essential if the country's third-largest airline is to remain in operation. The pilots have agreed to the pay cuts, which would save Eastern $300 million over three years, but demanded a commitment to restore the lost pay if the airline recovers financially.
The pilots have voted to strike at 12:01 a.m. Wednesday if there is no new contract, and management has said it will shut down if struck.
But pressure on the pilots to settle was heightened, some sources said, by the intervention of Lorenzo, who has been the bane of the airline unions since he took Continental into a Chapter 11 bankruptcy proceeding and broke its labor contracts in 1983.
Borman did not identify the bidder when he revealed the proposal to union representatives Saturday and company spokesmen declined comment yesterday, but other sources confirmed the proposal.
"The proposal is real. The proposed buyer is Lorenzo," said Charles G. Bryan of the International Association of Machinists and Aerospace Workers, leader of Eastern's mechanics and a member of Eastern's board.
Lorenzo's offering price was not disclosed. He is in the process of bringing Continental out of its bankruptcy reorganization with a plan to repay creditors and has several hundred million dollars in available capital to help finance an acquisition of Eastern, sources said.
For years, Eastern has been struggling to defend its territory against lower-cost competitors such as Continental and People Express, whose pilots and crews are nonunion. Miami-based Eastern lost $355 million in the last five years, but managed a $6.3 million profit in 1985, thanks to strong performance from February through August.
Since then, the airline's financial condition has taken a sharp turn downward, with Eastern citing fare wars and intensifying competition, and the union blaming the reversal on airline mismanagement.
Eastern is $2.5 billion in debt and its lenders have told the airline it must obtain substantial, permanent cost-cutting agreements with its unions by Friday, or be in technical default on its loans. At that point, the lenders could demand accelerated repayment, or begin claiming Eastern's aircraft or other assets.
Two days before that is the pilots' strike deadline. Eastern's 7,200 flight attendants have set a March 1 strike deadline.
With the lenders' deadline and the strike deadlines drawing close, Eastern was experiencing a "serious" drop in advance reservations, an airline spokesman said last week.
Eastern shuttles, between Washington and New York and Boston, and its new South American routes are profitable, as are some budget flights. But elsewhere its system is in serious trouble.
Lorenzo's New York Air recently mounted an advertising offensive against the Eastern shuttle, and Continental has damaged Eastern on other routes.