Gerald Greenwald, heir-apparent to Chrysler Corp. Chairman Lee A. Iacocca, took a startling turn into another industry yesterday, agreeing to head up a union effort to take over United Airlines.
Although the news should boost the union's ability to get financing for its takeover of the nation's second-largest airline, Greenwald's departure is a blow to Chrysler, which has been struggling to hold onto its position as the third-largest automaker in the United States. It also marks the third departure of a top Chrysler executive in a month.
Ever since United Airlines parent UAL Corp. agreed in April to be acquired by its unions for $4.4 billion, the airline's labor leaders have been looking for a highly visible business leader to replace Chairman Stephen M. Wolf. Finding the right replacement for Wolf has been viewed as a prerequisite for obtaining financing for the deal, since most banks are reluctant to pour billions of dollars into an airline without knowing who would be running it.
Greenwald is the most recent in a string of business leaders, including some top airline executives, who have been courted by the UAL unions. Under his five-year employment agreement, Greenwald would receive a minimum guaranteed annual salary of $1 million, plus an undetermined signing bonus, according to an airline industry source. Greenwald, 54, earned $1 million in salary and bonuses at Chrysler last year.
Greenwald's re'sume' is impressive. He was one of several key people who worked with Chrysler to pull the company from the brink of bankruptcy in 1979 and 1980. He became vice chairman of Chrysler in 1981 and was named chairman of Chrysler Motors Corp., Chrysler's vehicle operation, in 1981. In 1988, Greenwald joined Iacocca in a two-member office of the chairman, thus establishing his place as Iacocca's heir-apparent.
Like Iacocca, Greenwald went to Chrysler after a long and successful career at Ford Motor Co. At Chrysler, Greenwald was the finance whiz and Iacocca the driving genius behind product development and marketing.
Greenwald, for example, was largely responsible for Chrysler's mid-1980s foray into business diversification -- a tack that Iacocca recently changed in favor of more emphasis on product development and sales.
Some auto industry analysts suggested yesterday that Iacocca's renewed attention to the business of cars and trucks, and his downgrading of the diversification strategy, played a big role in Greenwald's decision to leave as well as in the recent resignations of Chrysler treasurer Frederick Zuckerman and vice president for international affairs Michael Hammes, who left earlier this month to become executive vice president of Black & Decker Corp. and president of the Hunt Valley, Md., company's Power Tools Group.
The departure of these three executives comes at a critical time for Chrysler. The company's profits fell to $359 million last year, a 66 percent decline from the $1.1 billion it earned in 1988. Its combined share of the new car and truck market in the United States fell to 10.7 percent in April 1990 from 14.2 percent a year ago. And making matters worse is the success of Honda Motor Co.'s U.S manufacturing and marketing subsidiary, which held 6.1 percent of the U.S. market in April 1990, up slightly from the 6 percent it held at the same time last year.
Honda sells only cars in the United States. Without trucks, Chrysler would be running neck and neck with Honda for third place in the U.S. auto market.
Those developments have fueled speculation about Chrysler's long-term ability to survive as an independent company. There is much talk that the American car company might merge with or form a joint operating venture with Italy's Fiat or Germany's Volkswagen. Chrysler has had extensive dealings with both foreign automakers; but Iacocca and other Chrysler executives routinely have dismissed reports of a future merger.
In announcing his departure from Chrysler, however, Greenwald expressed his confidence in the car company's future but said the job at United is "an opportunity I can't turn down."
Whatever problems Greenwald's departure may create for Chrysler, it could help solve some for United's unions as they attempt to buy the carrier.
Gus Oliver, a partner in Coniston Partners, a New York investment firm that is a major shareholder in UAL Corp., said that Greenwald "is very credible and will give the effort a big boost." Oliver said that Greenwald's appointment would help the unions line up financing for their deal.
"There is a much better likelihood of this deal getting done than many people think," said Oliver, who said that the banks, although more closely watched by regulators than they were in the 1980s, are still hungry for good takeover deals and the fees they generate.
The unions said that Greenwald's first task would be to work with Salomon Brothers and Goldman Sachs in seeking bank financing for the acquisition.
However, the unions still need to find a good airline operations executive to run the carrier, said Robert J. Joedicke, of Shearson Lehman Hutton Inc.
"As an administrator, he is highly regarded," Joedicke said of Greenwald. "I certainly think that he can run the corporation; but I think the pivotal job the unions have got to fill is that of the chief operating officer, and they're not easy to find."