UAL Board Member Denies Board Dissatisfaction with Merger Plans
CHICAGO (AP) _ A senior board member of UAL Inc. says there is no truth to a published report that the board of directors is unhappy with chairman Richard J. Ferris’ plan to link the company’s hotel, car-rental and airline companies.
Charles F. Luce, a longtime director of UAL, issued a statement Sunday saying the board is ″100 percent behind″ Ferris’ plans.
UAL plans to change its name on April 30 to Allegis Corp. in a move designed to change the company’s image to that of a total travel company. New advertising will promote the company’s United Airlines, Westin Hotels and Hertz Corp. divisions as services beneath the Allegis umbrella, UAL has said.
Luce issued his statement in response to an article in Friday’s Wall Street Journal that quoted unidentified sources as saying there was boardroom dissatisfaction with the corporate plan.
While ″board members have not been dissatisfied with the financial performance of Westin Hotels and Hertz,″ they are unhappy with the recent earnings of United Airlines, Luce said in his statement.
″But we recognize that the fare wars begun by non-union competitors have been responsible for a large part of our difficulties,″ the statement said.
United posted an $80.6 million loss in 1986 and an $88.2 million loss in 1985. It has since become the target of a buyout offer by its own pilots.
UAL spokesman Matt Gonring said Sunday the company has agreed to meet further with the pilots on their $4.5 billion offer.
Since last Tuesday, when Ferris wrote to the Air Line Pilots Association requesting that the pilots clarify their initial offer of April 5, financial advisers for both groups have met once, Gonring said. He said the advisers, Morgan Stanley of New York for UAL and Lazard Freres of New York for the pilots’ union, would meet again.
ALPA, which represents United’s 7,000 pilots, also has asked other unions representing United employees to join what would become the nation’s largest employee stock ownership plan.
The pilots made the offer amid speculation that other investors were interested in taking over the parent company and selling off some of its operating subsidiaries.
Last Thursday, though, a union representing United machinists expressed little interest in the offer, in which stockholders would have to make wage and benefit concessions to attract financing.
Under the pilots’ proposal, United would be purchased by a stockholders’ plan financed by $300 million borrowed from the pilots’ pension fund, along with another $300 million in annual wage and benefit concessions.
The concessions would be required of stockholders for seven years, the pilots’ union has said.