After nearly a year of negotiations, Eastern Airlines reached an agreement in principle Thursday with its unsecured creditors on a plan to bring the carrier out of bankruptcy within several months. Details of the agreement must still be worked out, and the consent of Eastern's secured creditors obtained, but Thursday's pact should make it possible for Eastern to file a reorganization plan in Federal Bankruptcy Court in Manhattan in mid- or late March, a person involved in the negotiations said.
If the plan is approved by Bankruptcy Judge Burton R. Lifland, and if none of the many conditions of Thursday's pact is broken, Eastern could emerge from bankruptcy in June or July.
The agreement calls for part of the creditors' compensation to consist of notes issued or guaranteed by Continental Airlines, which like Eastern is a subsidiary of Texas Air Corp.
Frank Lorenzo, the chairman of Texas Air, had repeatedly vowed last year not to allow Texas Air or Continental's assets to be used to pull Eastern out of bankruptcy.
Thursday's agreement represents the first time Texas Air has consented to do that.
The agreement calls for Eastern to pay 50 cents on the dollar for all legally enforceable debts to unsecured creditors _ those without claims on specific Eastern assets, like aircraft _ up to a maximum of $546.5-million, said Barry P. Simon, Eastern's general counsel.
The first $300-million is to be paid in cash, with the rest in the form of eight-year notes in equal proportions from Eastern and Continental.
The notes from Eastern are to be guaranteed by Continental and secured by Eastern's gates at Atlanta's Hartsfield International Airport.
Simon estimated Eastern would end up paying $850-million to $900-million in unsecured liabilities, but two people involved in the bankruptcy case said negotiators of the agreement had used the figure of $980-million in their talks.
That would make the settlement worth $490-million.