Report: UAL to name top exec
Wall Street Journal says board picked Tilton
By Jennifer Waters, CBS.MarketWatch.com
Last Update: 5:39 PM ET Aug. 31, 2002
NEW YORK (CBS.MW) -- As it struggles to stay out of bankruptcy and placate distrustful unions, UAL is said to have filled its crucial chief executive position.
Glenn Tilton will be named chairman and chief executive officer as soon as Monday when the UAL board is scheduled to meet in Chicago, the Wall Street Journal reported Saturday on its Web site.
Tilton, who has no airline management experience, is presently vice chairman of the board at ChevronTexaco (CVX: news, chart, profile) and interim chairman at Dynegy (DYN: news, chart, profile), in which ChevronTexaco holds a stake.
Quoting sources close to the UAL decision, the Journal said Tilton, 54, was selected over John Walker, a UAL director who is chairman at Weirton Steel (WRTL: news, chart, profile), based on Tilton''s leadership skills.
Also vying for the position was John McDannel, a retired UAL pilot. McDannel was launching a grass-roots effort to grab the controls.
Tilton was chairman and CEO at Texaco before it merged with Chevron in October 2001. A spokesman at Chevron said the company does not comment on rumors or speculation.
Capt. Herb Hunter, chairman of the United Airlines pilots'' Master Executive Council, said he had not heard anything from the company about Tilton becoming CEO, but he saw any change as a positive step.
"We''re ready for someone to take a leadership role," he told CBS.MarketWatch.com.
United''s executive suite has been in disarray since James Goodwin was forced to leave as CEO last year. Jack Creighton, a retired Weyerhaeuser chairman and CEO, has worn those same hats at United on an interim basis. But Creighton on Sunday turns 70, the mandatory retirement age at UAL.
As part of a 1994 accord between UAL and its unions, employees own 55 percent of UAL shares. Board members of UAL include Paul Whiteford Jr., executive chairman of the Airline Pilots Association, and Stephen Canale, an officer in the machinists union.
The present executives would be expected to leave soon, the Journal said. Creighton announced in May that he would be leaving his posts. UAL President Rono Dutta and COO Andy Studdert would also step down, the Journal said..
It is likely that CFO Jake Brace, who was recently promoted, would stay in place.
Tilton would take over an airline that''s in deep schism with its unions amid attempts to gain a federal guarantee for a $1.8 billion loan. But the unions could look favorably on putting a fresh face in charge, as well as purging the existing management.
United Airlines'' flight attendants union on Friday rejected management''s proposed steps to slash costs by $9 billion over six years until a new top executive comes in with a recovery plan.
Echoing the position of the carrier''s unionized pilots and mechanics, the flight attendants took issue with the offer as the airline scrambles to qualify for the federal loan guarantee.
United parent UAL Corp. (UAL: news, chart, profile) has until Sept. 16 to resubmit its application with the Air Transportation Stabilization Board, whose aid it hopes would help it stave off filing for bankruptcy.
Though details haven''t been released, United''s emergency cost-savings plans include employee concessions that would wipe out $1.5 billion a year in wages and benefits, plus canceled or deferred raises. Management also is calling for other work-rule changes toward making as much as $2.5 billion in annual cuts.
In July, UAL reported a quarterly loss of $392 million, or $6.99 per share, sharply higher than the $292 million and $5.50 it lost in the year-ago period. Revenue nosedived 20 percent in the quarter to $3.8 billion.
United says that chopping out $2.5 billion in expenses a year "will better align costs with anticipated future revenues and increase the likelihood that the company will qualify" for its loan guarantee.
That''s an awful lot of money for a $1.8 billion backup, the flight attendants said. Like the pilots, the flight attendants suspect there''s an underlying motive.
"The math doesn''t add up," said union President Greg Davidowitch. "So, we ask again: Who''s using whom?
"Is United using the ATSB as its heavy to extract huge concessions from its workers to cover for years of mismanagement?" he added. "Or is the White House attempting to dictate what airline workers in this country earn through the ATSB? Both scenarios are un-American."
The union, which represents more than 26,000 United flight attendants, reiterated that it wouldn''t consider compromise without a viable plan and called for a new executive to replace Creighton.
"United management wants its employees to invest $9 billion of our hard-earned money in an airline with no plan and no leader," Davidowitch said. "While we continue to meet with the company, there will be no concession talks under these circumstances."
The pilots union, a much stronger force because of its 28 percent ownership position, took an even harsher stance, saying that the pricey request was "totally and wholly unacceptable."
In a parley unusual for United''s labor force, all three unions were scheduled to meet in the coming week to discuss the latest call for givebacks.
"We intend to work in conjunction with the other union leaders as we develop a response to the company''s latest proposal, and will forward it to management as soon as possible," the pilots union said Friday.
Ahead of the reported executive change, unions'' tough attitudes did not bode well for quick recovery, said analysts at Standard & Poor''s. The credit rating agency is keeping UAL''s debt rating on watch with "negative implications."
"The scale and complexity of reaching concessionary agreements in a short time, the unions'' initial very negative reaction, and United''s long history of difficult labor relations imply that a bankruptcy filing is more likely than not," said S&P analyst Philip Baggaley.
Investors took a negative stance too, lopping off another 6 percent from the stock''s price, which ended the session at $2.87. Amid ongoing discussions with the unions, investors crushed better than 35 percent of the stock''s value this past week.
Jennifer Waters is the Chicago bureau chief for CBS.MarketWatch.com.
Wall Street Journal says board picked Tilton
By Jennifer Waters, CBS.MarketWatch.com
Last Update: 5:39 PM ET Aug. 31, 2002
NEW YORK (CBS.MW) -- As it struggles to stay out of bankruptcy and placate distrustful unions, UAL is said to have filled its crucial chief executive position.
Glenn Tilton will be named chairman and chief executive officer as soon as Monday when the UAL board is scheduled to meet in Chicago, the Wall Street Journal reported Saturday on its Web site.
Tilton, who has no airline management experience, is presently vice chairman of the board at ChevronTexaco (CVX: news, chart, profile) and interim chairman at Dynegy (DYN: news, chart, profile), in which ChevronTexaco holds a stake.
Quoting sources close to the UAL decision, the Journal said Tilton, 54, was selected over John Walker, a UAL director who is chairman at Weirton Steel (WRTL: news, chart, profile), based on Tilton''s leadership skills.
Also vying for the position was John McDannel, a retired UAL pilot. McDannel was launching a grass-roots effort to grab the controls.
Tilton was chairman and CEO at Texaco before it merged with Chevron in October 2001. A spokesman at Chevron said the company does not comment on rumors or speculation.
Capt. Herb Hunter, chairman of the United Airlines pilots'' Master Executive Council, said he had not heard anything from the company about Tilton becoming CEO, but he saw any change as a positive step.
"We''re ready for someone to take a leadership role," he told CBS.MarketWatch.com.
United''s executive suite has been in disarray since James Goodwin was forced to leave as CEO last year. Jack Creighton, a retired Weyerhaeuser chairman and CEO, has worn those same hats at United on an interim basis. But Creighton on Sunday turns 70, the mandatory retirement age at UAL.
As part of a 1994 accord between UAL and its unions, employees own 55 percent of UAL shares. Board members of UAL include Paul Whiteford Jr., executive chairman of the Airline Pilots Association, and Stephen Canale, an officer in the machinists union.
The present executives would be expected to leave soon, the Journal said. Creighton announced in May that he would be leaving his posts. UAL President Rono Dutta and COO Andy Studdert would also step down, the Journal said..
It is likely that CFO Jake Brace, who was recently promoted, would stay in place.
Tilton would take over an airline that''s in deep schism with its unions amid attempts to gain a federal guarantee for a $1.8 billion loan. But the unions could look favorably on putting a fresh face in charge, as well as purging the existing management.
United Airlines'' flight attendants union on Friday rejected management''s proposed steps to slash costs by $9 billion over six years until a new top executive comes in with a recovery plan.
Echoing the position of the carrier''s unionized pilots and mechanics, the flight attendants took issue with the offer as the airline scrambles to qualify for the federal loan guarantee.
United parent UAL Corp. (UAL: news, chart, profile) has until Sept. 16 to resubmit its application with the Air Transportation Stabilization Board, whose aid it hopes would help it stave off filing for bankruptcy.
Though details haven''t been released, United''s emergency cost-savings plans include employee concessions that would wipe out $1.5 billion a year in wages and benefits, plus canceled or deferred raises. Management also is calling for other work-rule changes toward making as much as $2.5 billion in annual cuts.
In July, UAL reported a quarterly loss of $392 million, or $6.99 per share, sharply higher than the $292 million and $5.50 it lost in the year-ago period. Revenue nosedived 20 percent in the quarter to $3.8 billion.
United says that chopping out $2.5 billion in expenses a year "will better align costs with anticipated future revenues and increase the likelihood that the company will qualify" for its loan guarantee.
That''s an awful lot of money for a $1.8 billion backup, the flight attendants said. Like the pilots, the flight attendants suspect there''s an underlying motive.
"The math doesn''t add up," said union President Greg Davidowitch. "So, we ask again: Who''s using whom?
"Is United using the ATSB as its heavy to extract huge concessions from its workers to cover for years of mismanagement?" he added. "Or is the White House attempting to dictate what airline workers in this country earn through the ATSB? Both scenarios are un-American."
The union, which represents more than 26,000 United flight attendants, reiterated that it wouldn''t consider compromise without a viable plan and called for a new executive to replace Creighton.
"United management wants its employees to invest $9 billion of our hard-earned money in an airline with no plan and no leader," Davidowitch said. "While we continue to meet with the company, there will be no concession talks under these circumstances."
The pilots union, a much stronger force because of its 28 percent ownership position, took an even harsher stance, saying that the pricey request was "totally and wholly unacceptable."
In a parley unusual for United''s labor force, all three unions were scheduled to meet in the coming week to discuss the latest call for givebacks.
"We intend to work in conjunction with the other union leaders as we develop a response to the company''s latest proposal, and will forward it to management as soon as possible," the pilots union said Friday.
Ahead of the reported executive change, unions'' tough attitudes did not bode well for quick recovery, said analysts at Standard & Poor''s. The credit rating agency is keeping UAL''s debt rating on watch with "negative implications."
"The scale and complexity of reaching concessionary agreements in a short time, the unions'' initial very negative reaction, and United''s long history of difficult labor relations imply that a bankruptcy filing is more likely than not," said S&P analyst Philip Baggaley.
Investors took a negative stance too, lopping off another 6 percent from the stock''s price, which ended the session at $2.87. Amid ongoing discussions with the unions, investors crushed better than 35 percent of the stock''s value this past week.
Jennifer Waters is the Chicago bureau chief for CBS.MarketWatch.com.