AIRLINES: Peanuts from a Greedy Parent

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Ever since Eastern Air Lines went bankrupt a year ago this week, its creditors and unions have contended that Texas Air, the troubled carrier's parent firm, had stripped the airline like an abandoned car. Last week the bankruptcy-court examiner endorsed that view, ruling that Texas Air underpaid Eastern by as much as $403 million in twelve separate transfers to Continental Airlines and other Texas Air units of such assets as aircraft and airport gates. In the most egregious case, Texas Air paid Eastern only $100 million for the airline's entire computer reservations unit. Yet last month the parent firm sold a half interest in the system to General Motors for $250 million.

Texas Air has agreed to pay Eastern $280 million to settle the examiner's charges. That should please Eastern's creditors, but will do the workers little good. Texas Air chief Frank Lorenzo has already hired nonunion machinists to help get Eastern off the ground.