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EARNINGS

Eastern Posts $44-Million Loss in Second Quarter

August 01, 1986

Eastern Airlines said it lost $44 million in the second quarter of 1986, blaming the results on industrywide fare discounting and the Miami-based carrier's own labor problems.

Texas Air Corp., which is buying Eastern for $676 million, said it lost $44.8 million in the April-June period, largely because of $64.2 million in bankruptcy related expenses by its Continental Airlines unit. Continental has been operating under federal bankruptcy law protection since September, 1983.

Eastern's loss compared to a profit of $25.5 million in the comparable 1985 quarter. Revenue totaled $1.11 billion vs. $1.27 billion.

Eastern President Joseph P. Leonard said in a statement that operations and traffic are improving but that "the combination of industry fare discounting and earlier union threats against the company were negatively felt across both the first and second quarters."

Labor friction, which has long plagued the airline, intensified earlier this year when Eastern's management demanded contract concessions from its 41,000 employees because of heavy losses and a $2.5-billion debt. Flight attendants threatened to strike, but a settlement was reached in April.

For the first half of this year, Eastern said it lost $154.7 million, compared to a profit of $49.8 million in the first half of 1985. Revenue totaled $2.25 billion vs. $2.49 billion.

The carrier also announced that it will reduce daily operations at Charlotte, N.C., effective Oct. 1, and that 186 of Eastern's 1,125 employees there will be transferred as part of a cost-cutting effort.

Texas Air, based in Houston, said it would have made a $19.4-million profit in the second quarter without the bankruptcy related expenses incurred by Continental. Texas Air also owns New York Air, an East Coast regional airline.

The loss compared to earnings of $41 million in the comparable quarter of 1985. Revenue totaled $539.6 million vs. $495.1 million.

For the first six months of this year, Texas Air said it lost $51.3 million, compared to earnings of $53.7 million for the same period last year. Revenue totaled $1.05 billion, up from $906.49 million a year earlier.

Texas Air reached an agreement in February to buy Eastern, a merger that would create the country's biggest airline. The federal government has tentatively approved the acquisition.

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