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Banks Refuse Eastern Paychecks; Soldiers Stranded En Route to War

January 21, 1991

ATLANTA (AP) _ Banks and stores refused to immediately cash the paychecks of Eastern Airlines employees while some military personnel trying to report for duty in the Mideast were briefly stranded after the carrier’s shutdown.

″I have a wife, two kids, a baby on the way and no money,″ Eastern mechanic Bill Snider said after a check-cashing store refused to pay his $491.14 payroll check. ″This is just ridiculous.″

The 62-year-old airline abruptly stopped service at midnight Friday, after almost two years in U.S. Bankruptcy Court. Eastern was more than $3 billion in debt and had been ravaged by lagging business.

After the shutdown, the airline’s court-appointed bankruptcy trustee, Martin R. Shugrue Jr., said financially qualified investors or buyers had expressed interest in buying Eastern assets.

Bank South Corp. and First Union National Bank said they would only accept payroll checks from Miami-based Eastern for deposit, placing them on hold to see whether they clear.

″There is absolutely no reason why banks should not be cashing checks other than just plain ignorance,″ said spokeswoman Karen Ceremsak. ″There is cash to back every check out there. All existing and current Eastern checks are good. We are still under Chapter 11.″

Representatives for Trust Company and Citizens and Southern banks said they wanted to determine whether payroll checks were covered by Eastern’s Chapter 11 protection before they cashed them.

″Because of the timing, we don’t have all the information we need,″ said bank spokesman J. Scott Scredon. ″If the trustee is saying the money is there, we will honor the checks.″

Delta Air Lines at Hartsfield Atlanta International Airport on Saturday refused to honor Eastern tickets held by three Navy medical officers en route to Saudi Arabia.

Navy. Lt. Cmdr. Lynn Nicolai and two members of her medical unit didn’t know Eastern had shut down when they approached Eastern gates at Hartsfield Atlanta International Airport Saturday.

″Eastern told us Delta would take the tickets,″ Nicolai said. ″Well, we told the Delta people we’re on active duty and that they should certainly honor our government tickets. They basically told us our tickets are worthless and, ’Tough luck.‴

Unsure whether other airlines would honor the government-purchased tickets and fearing further delays, Nicolai used $900 of her own money to get the group to their next stop.

″On top of all the other pressures and worries of this war and having to leave my little daughter, I have to face this,″ the nurse said.

Delta spokesman William Berry said if the Eastern ticket was issued by the military, it should have been accepted.

But while Delta was allowing travelers in the middle of an Eastern flight to continue, Delta would not accept tickets held by people beginning their trips, Berry said.

In Florida, state Labor Secretary Frank Scruggs predicted Sunday that Eastern’s shutdown would eventually put 10,000 to 14,000 Florida residents out of work and cost the state about $40 million in worker’s compensation.

Florida Gov. Lawton Chiles, anticipating a rush of workers filing for unemployment benefits, ordered the opening of two temporary job centers in the Miami area, Scruggs said.

About 7,000 of Eastern’s 18,000 employees work in South Florida, most of them at the airline’s headquarters at Miami International Airport.

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