NEW YORK, NOV. 14 -- A federal bankruptcy judge tonight granted Eastern Air Lines Inc. a reprieve from its creditors, giving the financially crippled airline $15 million, enough money to stay in operation at least through the Thanksgiving holidays.
U.S. Bankruptcy Judge Burton R. Lifland, after more than seven hours of hearings, rejected creditor demands that Eastern be shut down to preserve what little of their money was left.
Lifland told the more than 200 people packed into his tiny courtroom that he would take another look at Eastern's financial position Dec. 3 to determine if the cash-short airline should get any more money. Eastern had asked the court for $30 million from an escrow account controlled by the court.
Lifland said he would base his decision on granting further payments at least in part on how well Eastern meets its revenue projections. But he said he would take into consideration the impact this week's bad publicity has had on the airline's bookings.
In ordering the $15 million payment, Lifland said it was "a close case," but he thought Eastern had made a reasonable argument for its own survival. He noted there also was a public interest in keeping Eastern flying.
Travel agents today reported many Eastern passengers were already inquiring about changing their flights following reports that the creditors were trying to shut down the airline.
It is unlikely that other airlines will honor Eastern's discounted tickets in the event Eastern is ultimately shut down.
After the ruling, Eastern trustee Martin R. Shugrue Jr. said the creditors had failed to make their case for liquidation.
"I didn't hear a scintilla of analysis from the creditors that would sway my analysis," a combative Shugrue said. "I've heard all that crap before."
Shugrue said he is convinced he will meet the revenue projections and will be able to turn Eastern around: "America loves an underdog and we're clearly an underdog."
Joel Zweibel, the attorney for the creditors, told Lifland that Shugrue "believes in miracles. The committee does not. The trustee can easily believe in miracles because it's not the trustee's money."
Alan S. Boyd, who as chairman of Airbus Industrie heads the creditors' committee, said the creditors would decide in the next few days whether to push further for liquidation.
Zweibel said the creditors could file a motion to force Eastern into involuntary bankruptcy where liquidation would be the only option.
Before the start of the hearing, special bankruptcy adviser David Shapiro had tried to get the two sides to agree to the $15 million plan eventually approved by Lifland. Both sides rejected the idea at the time.
"You can't manage a business that way. It's no way to run a railroad," Shugrue said about the piecemeal approach.
The hearing today was the latest twist in a nearly two-year saga that has seen Eastern dwindle in size from one of the nation's largest airlines to basically a one-hub carrier, operating out of Atlanta, with 18,000 employees.
Eastern was struck in March 1989 by the International Association of Machinists. The airline's unionized pilots and flight attendants immediately honored the picket lines, forcing Eastern to seek protection from its creditors in bankruptcy court five days later.
For 12 months, Eastern's major creditors -- which besides Airbus include such corporate giants as Boeing Co. and American Telephone & Telegraph Co. -- went along with efforts by airline management to try and fly Eastern out of bankruptcy, a process that saw the company sell off millions of dollars in assets to finance its efforts.
By last April, the creditors had had enough. Citing more than a billion dollars in losses since the bankruptcy filing, they asked Lifland to remove former Eastern owner Frank Lorenzo from control and appoint a trustee. Lifland complied.
Some creditors praised Shugrue's attempts to save the airline.
Since taking over, Shugrue has become something of a household figure as he featured himself in a major television campaign to advertise a series of marketing efforts that served to boost Eastern's traffic. But the creditors believe his effort was too little too late in an industry suddenly thrust into hard times by rising jet fuel prices and a national economic slowdown.
Lately, the creditors have come to believe that if any more money is handed out to keep Eastern alive, it might mean the current employees and suppliers may never be paid. This belief was underscored by the fact that efforts to sell Eastern to another carrier had failed.
In asking for liquidation, the creditors cited the fact that Northwest Airlines Inc. had withdrawn its offer to buy Eastern and that a bid by Trans World Airlines Inc. was way underpriced. There were no other bids.
The hearing coincided with the release of Eastern's earnings statement for the third quarter of 1990, which showed the airline lost $252.8 million, bringing its total loss for the year to $424.9 million. Since filing for bankruptcy, Eastern has lost more than $1.5 billion.