The pilots' union at United Airlines, anxious to prop up the faltering effort by airline employees to buy the carrier, urged its members yesterday to keep pressure on UAL Corp.'s board to support the employees' bid.
If the deal fails, the union raised the threat of everything from strikes to restructuring to corporate raiders in a letter to Air Line Pilots Association (ALPA) members.
The letter came as the pilots', flight attendants' and machinists' unions and other employees at the airline face considerable obstacles in their attempt to find financing for their bid. In the face of rising costs and declining earnings in the airline industry, the $4.4 billion, $201-a-share deal to which the UAL board had agreed appears unlikely to find support from banks and other investors. But the unions and others assisting them in their efforts apparently hope an offer of approximately $175 a share may still attract financing.
The letter from the pilots' union showed the strains of the effort to turn United into the nation's first employee-owned air carrier. "There is no question that the 3 1/2-year struggle toward achieving an employee-owned United Airlines has been fatiguing to everyone," the letter acknowledged.
The letter accused UAL Chairman Stephen Wolf of misleading the UAL board about the support for the effort by rank-and-file employees. The union also told its members that the board has been the object of a pro-Wolf, anti-buyout letter-writing campaign.
The employees have until Oct. 9 to come up with financing for the proposed deal but conceivably could come in with a revised offer or a request for another extension of the deadline. UAL's board meets Thursday.
ALPA urged its members to contact the board and express their support for the effort.
United spokesman Joe Hopkins said that "there is growing concern within the industry and among our employees about a highly leveraged carrier during these times" and said that Wolf has received "hundreds" of letters from workers expressing that concern.
The union raised several possibilities if the deal falls through. One was the prospect that Coniston Partners, the airline company's largest shareholder, might force a restructuring of the company aimed at boosting its share price. UAL's stock has fallen $200 a share in the past year.
Coniston is said to be keeping a close eye on negotiations and to be prepared to try to unseat the board under certain circumstances -- for instance, if the board fails to pursue an employee buyout offer that the investors believed viable.
The letter to the pilots also mentioned the airline's open labor contracts and labor problems "festering just below the surface." If a buyout fails, the unions will address those problems through means "up to and including a strike," the letter noted.