A federal grand jury yesterday charged Eastern Air Lines with a criminal conspiracy to fake records to conceal unperformed aircraft maintenance work -- an act that the nation's top law enforcement officer said "strikes a raw nerve in anyone who has ever boarded an airplane."
The 60-count indictment accuses Eastern of allowing aircraft to take off with critical electronic components either untested or defective; without engine inspections for cracks and other defects; and without checking to see if critical landing gear such as wing flaps and flight controls had been lubricated.
If convicted, the carrier could face up to $30 million in fines.
Ten former and current managers at Eastern who are named in the indictment also face up to five years in prison and fines of up to $250,000 for each count on which they are charged.
"Thousands of innocent passengers may have been put at risk every day by the criminal actions of these defendants," said U.S. Attorney General Richard Thornburgh. Law enforcement action was needed to "help restore the public trust in the safety of airline transportation," he said.
In a statement issued immediately after the indictment was handed up in the Eastern District of New York in Brooklyn, Eastern said that as a result of massive scrutiny by federal aviation officials, "today there is no question that Eastern is safe."
The FAA yesterday agreed that Eastern meets the FAA's safety standards. But FAA Administrator James B. Busey added that the agency would continue to study the indictment and "if we find anything that gives us concern regarding the current safety disposition of Eastern, we will take whatever action is necessary to protect the traveling public."
Although the indictment raises questions about how the FAA can defend against fraudulent records being filed by airlines, the FAA would not elaborate except to say that the carrier would be under intense scrutiny.
The grand jury charged eight current and two former management employees of the airline with participating in the conspiracy. Among them is the maintenance director whose territory included Washington National Airport and Baltimore-Washington International Airport. According to Eastern, the individuals indicted have been reassigned to non-maintenance positions while the grand jury pursues its investigation. As of yesterday, the eight Eastern employees were put on administrative leave.
The 45-page indictment charges that the alleged conspiracy was directed from Eastern's Miami headquarters under former vice president of maintenance Edward Upton, now a vice president of Fokker, USA. The grand jury charged that Upton and others developed a scheme that included "intimidation and coercion" to force maintenance managers to falsify records.
Eastern used its centralized computer system to falsify maintenance records and keep the FAA from grounding improperly maintained aircraft, the indictment charges.
Eastern had been involved in lengthy plea bargaining negotiations with the U.S. attorney in recent weeks. But those talks broke down late Monday night when the company refused to plead guilty to a conspiracy charge, saying it found no evidence of that.
Although the bulk of the indictment covers events that occurred before Eastern was hit with a labor strike on March 4, 1989, it also includes events that occurred as recently as October 1989. Many of the alleged incidents occurred during a period of intense competition in the airline industry over on-time performance.
U.S. Attorney Andrew J. Maloney said the investigation is continuing.
Most of the incidents alleged in the indictment occurred in New York's Kennedy International and La Guardia airports and involved flights to Florida, one of the airline's principal routes. However, the grand jury also filed charges involving Atlanta's Hartsfield Airport, which is now Eastern's chief hub.
The indictment comes at a time when Eastern is fighting for its financial survival and is certain to damage Eastern's uphill battle to win back passengers. Since it filed for bankruptcy protection more than a year ago, it has lost money at a rate that still exceeds $1 million a day.
Maloney said that there is no evidence of any improprieties since a federal bankruptcy court put Martin R. Shugrue in charge of the airline in April, replacing the management of Frank Lorenzo, chairman of Eastern's parent company, Texas Air Corp. Although the investigation covered a period dating back to 1985, before Lorenzo acquired the airline, most of the alleged violations cited in the indictment occurred when Lorenzo was in control. Neither Lorenzo nor former Eastern president Phil Bakes are named in the indictment.
"In no circumstances would Continental Airline Holdings or Texas Air as it was at the time have authorized or countenanced any action that would jeopardize the safety of our customers," said Art Kent, a spokesman for Lorenzo.
In the months leading up to the strike against Eastern, the airline's unions ran a massive campaign to try to persuade the flying public that Eastern was unsafe to fly. By the spring of 1988, the charges by the Air Line Pilots Association and the International Association of Machinists had become so frequent that the Department of Transportation ordered a special investigation of the airline's operations. In June 1988, the department concluded that there was "no question" that Eastern was operating safely but expressed concern that labor relations at the airline were so poisonous that it could affect safety in the future.
Yesterday, ALPA called the indictment "a vindication" of its charges against Eastern's management under Lorenzo. "We take great comfort in knowing that when a panel of ordinary citizens finally was presented with just a few of the safety violations in a proper legal forum they found sufficient cause to act against Eastern," the union said in a statement.
Maloney said he hoped the "unprecedented action" would "send a clear signal not just to Eastern but to the entire airline industry."
Staff writer Laurie Goodstein contributed to this report from New York.