Roanoke Times
                 Copyright (c) 1995, Landmark Communications, Inc.

DATE: TUESDAY, July 24, 1990                   TAG: 9007240388
SECTION: BUSINESS                    PAGE: A-3   EDITION: METRO 
SOURCE: The Washington Post
DATELINE:                                 LENGTH: Medium

NORTHWEST, EASTERN TALK PRICE

Checchi, who has expressed an interest in buying Eastern's Atlanta hub as well as other assets of the carrier, met with Chemical Bank's Arthur Newman, an airline expert for the creditors, apparently as a first step in making a bid for the airline's assets.

Representatives of the two airlines are scheduled to meet Wednesday with negotiators for the Pension Benefit Guaranty Corp. to discuss one of Eastern's biggest liabilities - its $800 million pension obligation. A spokeswoman for the PBGC said the agency expects "a significant amount of cash from the proceeds of any asset sales."

That demand could complicate negotiations over a sale because creditors would realize smaller profits unless they can force Eastern's owner, Frank Lorenzo, to pick up the tab for the pension fund. Under an agreement reached last April in federal Bankruptcy Court, Continental Holdings - then called Texas Air - agreed to assume responsibility for Eastern's huge pension liability. PBGC is negotiating with Eastern in an effort to get more money to fund past pension liabilities.

If Northwest bought the airline's assets but did not buy the company - including its employees - it could avoid liability for the pension.

Eastern's unsecured creditors have given Shugrue some time to either reorganize the airline or sell it as a going concern, but that time may be running out, said one investment banker Monday. In August, Eastern will be getting the last big infusion of cash from the sale of its Latin American routes to American Airlines. At the same time, it will be staring at a $95 million pension payment due in September. That payment would come in addition to any cash the PBGC might seek from asset sales.

Shugrue said Monday that the company has received no offer from Northwest to acquire any part of Eastern. He reiterated earlier statements that he is interested "only in offers for the complete airline with its employees and that there is no intention to liquidate the carrier."

Ten days ago, after meeting with the airline's creditors, Shugrue called a possible sale to Northwest a "viable" solution to Eastern's problems, which include continuing huge losses. Shugrue said that, while he hopes to include Eastern's current employees in any sale, the creditors would have the final say.