UAL Workers Still Expect To Buy Jets
CHICAGO (AP) _ United Airlines employees seeking to buy the carrier’s parent say UAL Corp. still is likely to place an aircraft purchase order soon - but not until the workers secure loans for the buyout.
The union-led buyout group and UAL’s board of directors announced Thursday that the company had suspended talks on a major order for widebody jets at the request of the buyout group, the United Employees Acquisition Corp.
″The purpose of this temporary delay is to permit UEAC to complete related financial negotiations with vendors while achieving the most efficient timing for placing an order,″ the buyout group said in a statement.
″This delay does not change the fact that a widebody aircraft order will likely take place soon.″
UAL directors said the aircraft order negotiations are on hold until Aug. 9, the deadline for the employees to secure financing for their proposed acquisiton of the company.
Steven Matthews, a spokesman for the buyout group, said the delay did not reflect concerns about the employees’ ability to find financing for both the $4.38 billion airline acquisition and the aircraft purchases.
The buyout group is trying to persuade a number of airframe and engine manufacturers to invest in the buyout.
Published reports have indicated the employees are negotiating with Boeing Co. and General Electric Co., as well as European manufacturers, trying to get the companies to put up some of the cash for the buyout. The companies could become preferred suppliers for the airline, as well as receiving either preferred stock or a note in UAL.
An analyst says the delay in the order may indicate a more cautious approach by employees leaders, who previously said they’d have no problem getting financing for the airline and plane purchases.
″It sounds like they’re saying, ’Let’s take care of the financing for the buyout first and then see what we can do on the aircraft acquisition,‴ said Mark Daugherty, an airline analyst with Dean Witter Reynolds Inc. in New York.
UAL’s board said it had halted negotiations with aircraft and engine manufacturers until Aug. 9, the deadline for the buyout group to get financing for the acquisition of UAL, which is based near Chicago in Elk Grove Village.
The board said it took the action in ″an effort to be as accommodating as possible″ to the buyout group.
A spokesman for the buyout group, Steven Matthews, said the group is confident it can raise the money to buy both the airline and new planes.
UAL had been expected to announce within a matter of weeks the largest order ever placed for wide-body jetliners, possibly including Boeing Co.’s proposed model 777.
Although Boeing is well into development of the 777, it has not formally committed to building the 350-seat, twin-engine aircraft. That decision, expected this summer, depends on Boeing getting enough orders to make starting production worthwhile.
No orders have been announced to date.
In Seattle, Boeing Commercial Airplane Group spokesman Craig Martin said he assumed negotiations with UAL would resume in August.
Boeing has been negotiating ″hot and heavy as have Airbus and McDonnell Douglas,″ Martin said. ″Things had been moving toward some resolution.″