Allegis Corp., which owns United Airlines, said late last night that it will accept the resignation of Chairman Richard J. Ferris and will consider dismantling the integrated travel services corporation that he has built.
The move appeared to be the board's latest, most desperate attempt to fend off takeover threats that have swirled around it since the airline's pilots put the company into play in April by announcing that they wanted to acquire the airline and operate it separately. Last month another takeover threat emerged when Coniston Partners, a New York investment partnership, launched a battle for control of Allegis by calling for its dismemberment.
The pilots had been sharply critical of Ferris, whom they have referred to sarcastically as "born to shop" for his strategy of diversification, which included the purchase of Hertz Corp. and Hilton International Hotels.
Ferris had hoped to create synergy among the travel services operations that would build a loyal cadre of customers using the corporation's car rental, hotels and airline.
After a special meeting in New York last night, the board of Allegis -- a name chosen to replace UAL Inc. to emphasize that the corporation is more than an airline -- said that Ferris had resigned and said it would seek to address the interests of shareholders. As a result, said Charles F. Luce, senior director of Allegis, the board will reconsider options, including selling Hertz and the Westin and Hilton International hotel chains. The board will also consider a recapitalization plan that would involve the active participation of all employe groups in an employe stock option program, he said. Luce also said he expected the corporation's new chairman to propose renaming the company United Airlines Inc.
The new president is Frank A. Olson, chairman and chief executive officer of the Hertz Corp. Former chairman Edward Carlson was renamed to the Allegis board of directors.
The moves by the board indicated that time was running out on Allegis and Ferris' dream of making it bigger and stronger than just an airline. The board had staged a series of maneuvers over the last few months aimed at protecting the corporation from takeover attempts, including granting generous severance agreements to 37 top-ranking executives; buying new airplanes using a credit agreement with Boeing that gave the airline manufacturer an option to acquire a significant position in Allegis, and then, last week, proposing a recapitalization plant that would have given shareholders $60 a share in cash as well as allowing them to retain their stock. The plan was designed to provide the same type of short-term gratification as a sale of the corporation assets but would give Ferris' strategy time to work.
Earlier yesterday, the pilots had announced that they were suing Allegis to force the company to submit a new proposal they made over the weekend to shareholders.
Ferris' resignation "was obviously what the pilots wanted," said a source close to the corporation. The integrated travel services corporation was Ferris' concept "so it was appropriate that he go with it," the source said.