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Mediation Board to have Eastern Airlines and Continental Airlines employees declared one work force for purposes of representation, which would bring about the merging on Eastern and Continental Airlines.
Eastern's management, Continental's management and Texas Air's management have opposed those motions and have suggested to the National Mediation Board that we have been operating separately and that it is our intent to continue to operate the two carriers separately. The timing for that decision, I believe, will be early in the first quarter of next year...
That should not have a negative impact, in my view, as regards retirees, but certainly it has an impact on our ability to manage the company, and how we would operate in the future.

You
...Our primary purpose for being here today is to ger sensitized to retiree issues. We tend to have a workload and a set of problems facing the company that cause us to treat retirees a little bit as if you are no longer a part of the company. We want to ensure that retirees recognize that their Company has not forgotten about the years of service they have given to us...

QUESTIONS & ANSWERS
RETIREES SEMINAR, OCTOBER 12, 1988

State of the Airline

Q. I was concerned about the Donald Trump takeover. Every day I read in the newspapers about our aircraft being sold off and we keep shrinking our airline and our South American routes will be next for some buyer that has a lot of money.
What's going to happen in the next year when we don't see Eastern planes anymore or Eastern ticket counters? How do we go as retirees? How will we be protected in case of that?

A. There is a lot of retiree and active-employee concern about what happens to this company if it continues to lose money and has to raise cash. And there's a right to be concerned. This company has financial problems. I'll give you one example: In the case of the employees in February of '86 and the opportunity for the active employees at that time to join together to avoid the takeover by Texas Air by all employees joining and taking a 20% pay cut, flight attendants, pilots and non-contract employees chose to do that. One group chose not to. The failure to join with the rest of the group has now cost Eastern Airlines since February '86 $260 million in cash. Not $26 million - $260 million in cash. Now we have to deal with that. We have to continue to make those payments. We still have our contractual problems. We still have the labor negotiations going on, so I can't say anything today to you that will remove your right to be concerned about the future of Eastern Airlines. That a legitimate concern. However, retirees are protected in many ways that active employees would not be protected. And that is because there are laws that protect retirees. There are funds that are already in the pension plan and protect retirees that are not touchable by Texas Air, Eastern or anybody else. They are there for the sole benefit of the retirees of Eastern.
Therefore, even though you have a right to be concerned about Eastern, I would not spend a lot of time worrying about your retiree benefits. But there is nothing I can say to you today that is going to make our financial problems go away.

Q. If the sale of the Shuttle does go through to the Trump Organization, what percentage of that money will stay at Eastern Airlines, what percentage will go to Texas Air and Continental?

A. All the monies of the transaction, the $365 million, will go to Eastern Airlines. It is an Eastern Airlines transaction. We have a very difficult time and I spend a lot of time meeting with employees around the system, asking questions about what we refer to from a financial standpoint as affiliate transactions. And those affiliate transactions have now been the subject of a great deal of investigation by the Department of Transportation who found nothing wrong with those transactions.
Although there has been a lot of publicity with regards to transactions between Texas Air, Eastern and Continental, the fact of the matter is they have all been found to have been appropriate. This transaction will be handled in much the same way.

Q. What is the status of the EAL negotiations, with the various unions that have sworn to put Eastern Airlines out of business?

A. In the case of the IAM, the IAMs' contract expired in 12/31/87. We began negotiation on October of 87. We entered in the mediation under the auspices of the National Mediation Board in January '88. The National Mediation Board continues to hold us in hostage, and continues to